Item 1.01 Entry into a Material Definitive Agreement.
On February 6, 2020, Lilis Energy, Inc. (the “Company”) entered into an Ninth Amendment (the “Ninth Amendment”) to the Second Amended and Restated Senior Secured Revolving Credit Agreement, dated October 10, 2018 (as amended from time to time, the “Revolving Credit Agreement”), among the Company, certain subsidiaries of the Company, as guarantors, the lenders party thereto, and BMO Harris Bank N.A., as administrative agent.
As previously disclosed, as a result of the January 17, 2020 redetermination of the borrowing base under the Revolving Credit Agreement, a borrowing base deficiency in the amount of $25 million (the “Borrowing Base Deficiency”) currently exists under the Revolving Credit Agreement. The Borrowing Base Deficiency constitutes the difference between the principal amount of borrowings currently outstanding under the Revolving Credit Agreement ($115 million) and the borrowing base as so redetermined ($90 million). The Company is required to repay the amount of the Borrowing Base Deficiency in four $6.25 million installments (each, an “Installment Payment”). Prior to the Ninth Amendment, the Installment Payments were due to be made on February 7, 2020, February 14, 2020, March 16, 2020, and April 14, 2020.
The Ninth Amendment amended the Revolving Credit Agreement to provide that the due date for the first Installment Payment is extended from February 7, 2020 to February 18, 2020 and the due date for the second Installment Payment is extended from February 14, 2020 to February 18, 2020. The due dates for the two subsequent Installment Payments remain March 16, 2020 and April 14, 2020.
As previously disclosed, the Company is currently considering transactions to fund the repayment of the Borrowing Base Deficiency. If the Company is unable to repay the Borrowing Base Deficiency as and when required under the Revolving Credit Agreement, an event of default would occur under the Revolving Credit Agreement.
The foregoing description of the terms of the Ninth Amendment is not complete and is qualified in its entirety by reference to the full copy of the Ninth Amendment filed as Exhibit 10.1 to this Current Report on Form 8-K.
Forward-Looking Statements:
This Current Report on Form 8-K contains forward-looking statements within the meaning of the federal securities laws. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. These risks include, but are not limited to, the Company’s ability to make the required repayments of the Borrowing Base Deficiency; the ability to finance the Company’s continued exploration, drilling operations and working capital needs; all the other uncertainties, costs and risks involved in exploration and development activities; and the other risks identified in the Company’s Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-looking statements in this Current Report on Form 8-K are made as of the date hereof, and the Company does not undertake any obligation to update the forward-looking statements as a result of new information, future events or otherwise.