Magnum Hunter Resources Corp (OTCMKTS:MHRC) was a massive mover during Friday’s trading session. The stock surged by close to 38% on the back of 3 times the average daily volumes, which is seen as a bullish sign. It is important to state that the stock has been in a strong downtrend right from the advent of the year and has underperformed the broader indices. Traders believe that the mover during Friday could just be a profit taking one and the stock could head lower in the near term. The momentum oscillators continue to trend lower and are showing no signs of a reversal.
Magnum Hunter Resources Corp (OTCMKTS:MHRC) announced that it had decided to refinance its senior secured revolving credit facility with the help of certain banks, and the additional liquidity obtained through a new loan.
As per the reports, the liquidity and additional refinancing is being provided in equal installments by those who hold more than a majority in the second lien term loan agreement of the company. Apart from them, the holders of 9.75% Senior Notes due 2020 are also contributing in this procedure.
Insights of The Matter
All of these lenders are likely to forbear from exercising certain rights with respect to certain default events and genuine work, upon coming to terms with negotiating consensual restructuring with Magnum. The new term loan facility comprises of a single-tranche term loan worth $60 million, which was approved on November 5, 2015. Around $44 million of this loan amount was used to repay the loan and letter of credit outstanding with certain banks.
The remaining $16 million amount is expected to be used for the payment of general corporate transactions and other expenses. Apart from the basic amount, the new term loan facility gives an option to Magnum under which the company can opt for a credit facility of upto $10 millions in the form of the term loan. The new term loan credit facility has a maturity date of December 30, 2015.
Hiring of Advisors To Explore Strategic Alternatives
Magnum has decided to hire Kirkland & Ellis LLP and PJT Partners LP (NYSE: PJT) as its legal and financial advisors to advise company’s board of directors and management regarding various strategic alternatives. It wants to take efficient capital structure moves to keep its liquidity intact in the coming months. So far it has done right to manage financial statements, including balance sheet in the best possible way, and hiring of these advisors will further enable it to keep the momentum going.