Item 1.02 Termination of a Material Definitive Agreement.
Upon repayment of all obligations under the First Secured Promissory Note dated
as of November 1, 2009, a Second Secured Promissory Note dated as of December
15, 2009, a Third Secured Promissory Note dated as of May 15, 2010, and a Loan
and Security Agreement dated as of March 19, 2010 (as amended, supplemented or
otherwise modified prior to the date hereof, the "MEI Loan Documents"), by and
among Miller Energy Income 2009-A, LP, a Delaware limited partnership ("MEI")
and the Company, as described in Item 1.01 and Item 2.03 of this report, the
parties agreed that the MEI Loan Documents have terminated.
As previously reported, on June 29, 2012, Miller Energy Resources, Inc. (the
"Company") entered into a loan agreement with Apollo Investment Corporation
("Apollo"), as administrative agent and lender, as amended from time to time,
which provided for a credit facility of up to $100 million (the "Prior Credit
Facility") with a borrowing base of $55 million and an additional Tranche B
Facility allowing for an additional $20 million in loans. The availability under
the Prior Credit Facility had been fully drawn by the Company.
As described in Item 1.01 and Item 2.03 of this report, the loans outstanding
under the Prior Credit Facility have been repaid in full. The terms of the Prior
Credit Facility were amended and restated in their entirety in connection with
New Credit Facility described in Item 1,01 and Item 2.03 and, except to the
extent incorporated into the New Credit Facility, the terms of the Prior Credit
Facility are superseded and without further effect.
As a result of the prepayment of the Prior Credit Facility, the Company owed
Apollo a prepayment and extension fee of $9.2 million (the "Prepayment Fee") in
connection with the termination and early repayment of borrowings under the
Prior Credit Facility. Pursuant to a letter agreement entered into by the
Company and Apollo, the Prepayment Fee shall be paid to Apollo in four equal
installments of approximately $2.3 million on the last day of each calendar
quarter, commencing June 30, 2014.
Item 2.01 Completion of Acquisition or Disposition of Assets.
As previously announced, on November 22, 2013, the Company's wholly-owned
subsidiary, Cook Inlet Energy, LLC ("CIE") entered into a Purchase and Sale
Agreement by and among Armstrong Cook Inlet, LLC ("Armstrong"), GMT Exploration
Company, LLC, Dale Resources Alaska, LLC, Jonah Gas Company, LLC and Nerd Gas
Company, LLC (together, the "Sellers") and CIE (the "Purchase Agreement"). The
Purchase Agreement contemplated the acquisition by CIE of (i) a 100% working
interest in oil and gas properties and related leases (consisting of
approximately 15,465 net acres) in the Cook Inlet region of the State of Alaska,
together with other associated rights, interests and assets (collectively, the
"Properties") and (ii) all the issued and outstanding membership interests (the
"Anchor Point Equity") of Anchor Point Energy, LLC, a limited liability company
owning certain pipeline facilities and related assets which service the
Properties, for $56.6 million in cash and $5.0 million of the Company's 10.5%
Fixed Rate/Floating Rate Series D Cumulative Redeemable Preferred Stock (the
"Preferred Stock") (this acquisition collectively, the "North Fork
On February 4, 2014, CIE completed the North Fork Acquisition pursuant to the
Purchase Agreement. The acquisition was deemed by the parties to have an
effective date of January 31, 2014. As the transfer of the
Anchor Point Equity will require certain regulatory approvals (as contemplated
by the terms of the Purchase Agreement) that portion of the transaction closed
into escrow, pending receipt of those final approvals. Accordingly the Preferred
Stock, which was allocated to the acquisition of the Anchor Point Equity, was
placed in escrow by the parties and will be held there pending completion of the
transfer. CIE is currently in the process of having itself designated as the
operator of the North Fork Unit and obtaining the approval of the State of
of the transfer of state-owned leases that form a portion of the
Properties to CIE.
Item 2.03 Creation of a Direct Financial Obligation.
On February 3, 2014
, (the "Closing Date"), the Company entered into an Amended
and Restated Credit Agreement (the "New Loan Agreement"), among the Company, as
borrower, Apollo Investment Corporation ("Apollo"), as administrative agent (in
that capacity the "Administrative Agent"), and the lenders from time to time
party thereto (the "Lenders").
The New Loan Agreement provides for a $175 million
term credit facility (the
"New Credit Facility"), all of which was made available to and drawn by the
Company on the Closing Date. The amounts drawn were subject to a 2% original
issue discount. Amounts outstanding under the New Credit Facility bear interest
at a rate of LIBOR
plus 9.75%, subject to a 2% LIBOR
floor. The New Credit
Facility permits the Company to enter into a reserve-based revolving credit
facility of up to $100 million
on certain agreed terms which would be secured on
a first-lien basis. Upon entering into such revolving credit facility and a
related intercreditor agreement, the New Credit Facility will become a
second-lien credit facility. The New Credit Facility carries a four year
maturity, which may be extended by up to an additional year as necessary so that
it matures at least six months after the maturity date of the first lien
revolving credit facility, if put in place. The New Credit Facility contains
customary second lien covenants, including a leverage ratio, interest coverage
ratio, current ratio and change of management control covenants. Subject to
certain conditions contained in the New Loan Agreement, the New Credit Facility
also allows for the Company to implement a discretionary share repurchase plan
on terms and conditions reasonably satisfactory to the Administrative Agent and
The Company used $75.3 million
of the proceeds drawn under the New Credit
Facility to refinance
the Prior Credit Facility with Apollo (as described above
in Item 1.02) and $56.6 million
the acquisition of the North Fork
Unit (as described above in Item 2.01). In addition, $3.8 million
was used to
retire the obligations owing under the MEI Loan Documents. The remainder of the
proceeds from the New Credit Facility will be used for general corporate
On the Closing Date, in connection with the New Credit Facility, the Company,
along with all of its consolidated subsidiaries (other than MEI), entered into
an Amended and Restated Guarantee and Collateral Agreement (the "Guarantee")
with Apollo, for the benefit of the lenders from time to time party to the New
Loan Agreement. Under the terms of the Guarantee and related security documents
each of the consolidated subsidiaries of the Company (other than MEI) have
guaranteed the Company's obligations under the New Credit Facility and the
Company and those subsidiaries have granted a security interest in substantially
all of their assets to secure the performance of the obligations arising under
the New Credit Facility.
The foregoing description is qualified in its entirety by reference to the full
text of the New Loan Agreement which is filed as Exhibit 10.01 hereto and
incorporated by reference herein and the Guarantee and Collateral Agreement
which is filed as Exhibit 10.02 hereto and incorporated by reference herein.
Item 3.02 Unregistered Sale of Equity Securities.
As described in Item 2.01 above, in connection with the North Fork Acquisition,
the Company has issued 213,586 shares its Preferred Stock to the Sellers as
consideration for the Anchor Point Equity, to be held in escrow pending receipt
of final regulatory approvals required in connection with the transfer of those
interests. The 213,586 shares were valued at approximately $5 million
purposes of determining the number of shares of Preferred Stock, the Preferred
Stock was valued on January 31, 2014
, as the average of the daily volume
weighted average prices of the Preferred Stock for the 10 trading days ending on
and including January 31, 2014
. The Preferred Stock was issued in reliance on an
exemption from registration under Section 4(a)(2) of the Securities Act of 1933,
as amended (the "Securities Act").
Item 7.01. Regulation FD Disclosure.
On February 5, 2014
, we issued a press release relating to the completion of the
North Fork Acquisition and the closing of the New Credit Facility, each referred
to above. Attached as Exhibit 99.1 is our press release relating to the
completion of the North Fork Acquisition.
Pursuant to General Instruction B.2 of Form 8-K, the information in this Item
7.01 of Form 8-K, including Exhibit 99.1, is being furnished and shall not be
deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of
1934 or otherwise be subject to the liabilities of that section, nor is it
incorporated by reference into any filing of Miller Energy Resources, Inc.
the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made
before or after the date hereof, regardless of any general incorporation
language in such filing.
Item 9.01. Financial Statements and Exhibits.
Exhibit No. Description
Purchase and Sale Agreement, dated as of November 22, 2013, by and
among Armstrong Cook Inlet, LLC, GMT Exploration Company, LLC, Dale
Resources Alaska, LLC, Jonah Gas Company, LLC and Nerd Gas Company,
LLC, as sellers and Cook Inlet Energy, LLC, as buyer incorporated by
reference to Exhibit 2.1 of Form 8-K filed with the Securities and
2.1 Exchange Commission on November 25, 2013.
Amended and Restated Credit Agreement dated as of February 3, 2014
among Miller Energy Resources, Inc., as Borrower, and Apollo
10.01 Investment Corporation, as Arranger and Administrative Agent.
Amended and Restated Guarantee and Collateral Agreement in favor of
10.02 Apollo Investment Corporation, as Administrative Agent.
99.1 Press Release relating to the North Fork Acquisition.