Magnum Hunter Resources Corp (OTCMKTS:MHRC) was a notable decliner during Tuesday’s trading session. The stock plunged by close to 9% on heavy volumes, which were 0.6 times the daily average. It is important to state that the stock has been in a strong uptrend ever since forming a bottom near levels of $0.02. The stock has come under selling pressure over the last couple of trading session, which is a cause for concern for traders. The stock currently trades below all daily moving averages. Traders see the stock heading to levels of $0.08 in the near term.
Magnum Hunter Resources Corp (OTCMKTS:MHRC) announced that it had taken certain measures to refinance its existing senior secured credit facility. As per the reports, it had contacted several banks and other financial institutions to obtain additional credit facility through a new secured term loan.
Insights of The Matter
As of now the refinancing and additional liquidity are being offered to Magnum Hunter in equal amounts by those who holds more than a majority of the second lien terms loan agreement of the company. Additionally, holders of more than a majority of the 9.75% Senior Notes of the company due by 2020 are also providing funding. Magnum Hunter is delighted to have associated with these lenders and looks forward to a long-term association.
These lenders have also given their approval with regard to forbearing certain remedies and rights related to certain default events in good faith. The new term loan credit facility comprises of a single-tranche term loan worth $60 million. Out of the entire proceeds from the new term loan facility, $44 million amount was used to refinance existing outstanding loans and letter of credit outstanding with a few banks. The remaining $16 million proceeds are to be used for general corporate purposes, payment of transaction fees and other expenses.
The new term loan facility also makes room for an uncommitted incremental credit facility for extra $10 million term loan principal. Reports claim that the new credit facility has come with a maturity date of December 30, 2015. Enhancing the capital structure and maintaining consistent liquidity have been two major challenges for the company over the past few months. With this new credit facility, Magnum Hunter looks forward to resolving this issue forever.
The senior management team is confident about this initiative and hopes that it will benefit the company in the long-term. It will continue to take more such decisions in the future, details of which will be announced at a later date.