As disclosed in the company’s Quarterly Report on Form 10-Q for the period ending 30 September 2018, the company has been evaluating potential alternatives with respect to its Credit Agreement to achieve the company’s business objectives and priorities, including exercising the company’s right to terminate the Credit Agreement. As of 30 September 2018, the Credit Agreement availability was reduced to US$16.2 million of borrowing capacity based upon the quarterly financial covenant calculations.
As of 30 September 2018, the company had US$109.5 million in cash and cash equivalents. The company has no outstanding borrowings or undrawn letters of credit under the Credit Agreement, the company has not historically used the Credit Agreement as a source of working capital and the company had no current plans to draw on the Credit Agreement. The Credit Agreement would have also required CPE Resources to pay over US$3.0 million in additional commitment and administrative fees during the remaining term of the Credit Agreement through May 2021, which will now be avoided.
The termination of the Credit Agreement does not result in a default under CPE Resources’ Accounts Receivable Securitization Program or the indentures for CPE Resources’ 12.00% second lien senior notes due 2021 or 6.375% senior notes due 2024. As a result of the termination of the Credit Agreement, the company will record a non-cash write off of certain deferred financing costs in the amount of approximately US$4.1 million.
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