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Sabine Oil & Gas Gets Add'l Forbearance From 2nd-Lien Lenders Re Skipped Coupon Payment

Sabine Oil & Gas has inked an amendment to its forbearance agreement with lenders to its second-lien term loan that extends the forbearance period to July 15, the company disclosed in an SEC filing today. The original forbearance agreement, which was signed in May, ran until end of June.

Specifically, the forbearance agreement covers defaults stemming from the skipped April 21 coupon payment on its second-lien term loan and the going-concern qualification in its 2014 financials, according to the filing. In exchange, the company has agreed to tighten certain covenants during the forbearance period, among other things.

Note that the company last week extended a forbearance agreement with its revolver lenders to July 15.

In a statement released this morning, the company said the amended forbearance agreement will provide it “with additional flexibility as it continues discussions with its creditors and their respective professionals regarding the [its] debt and capital structure.” As reported, Sabine said in March that it had retained financial advisor Lazard and legal advisor Kirkland & Ellis to advise on strategic alternatives related to its capital structure.

Recall Sabine skipped a $15.313 million interest payment due to its second-lien lenders on April 21. In light of the missed interest payment, S&P in April cut Sabine’s corporate and debt ratings to D, triggering a default in the S&P LSTA Leveraged Loan Index.

The $700 million loan was quoted at 33.5/35 earlier today, sources said.

The loan, originally $650 million under the prior issuer entity name NFR Energy, was placed in January 2013 to help finance the acquisitions of TLP Energy and certain assets of Blue Eagle Energy, though it was upsized by $50 million in December 2014. Wilmington Trust has assumed the role of administrative agent from original agent Bank of America Merrill Lynch. 

As of May 8, the company had a cash balance of approximately $276.9 million, which it said provides substantial liquidity to fund its current operations. – Kerry Kantin

For leveraged loan news and analysis check out www.leveragedloan.com, a free site powered by S&P Capital IQ LCD to promote the asset class. 

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