| Item 1.01 | Entry into a Material Definitive Agreement. |
On August 12, 2024, Devon Energy Corporation (the “Company”) entered into a delayed draw term loan credit agreement (the “Credit Agreement”) among the Company, as the borrower, each lender from time to time party thereto (collectively, the “Lenders”), and Bank of America, N.A., as administrative agent, providing for delayed draw term loans in an aggregate principal amount not in excess of $2,000,000,000, including (x) a 364-day delayed draw term loan tranche in an aggregate principal amount not in excess of $500,000,000 and (y) a two-year delayed draw term loan tranche in an aggregate principal amount not in excess of $1,500,000,000. The delayed draw term loans may be borrowed in a single draw subject to satisfying certain funding conditions, including that the Company’s previously disclosed acquisition of all of the issued and outstanding securities of Grayson Mill Intermediate HoldCo II, LLC and Grayson Mill Intermediate HoldCo III, LLC (the “Acquisition”) be consummated substantially concurrently with such borrowing.
The Credit Agreement provides that the delayed draw term loan proceeds will be used to fund a portion of the cash consideration of the Acquisition. Interest rates on the delayed draw term loan borrowings under the Credit Agreement are determined based on the applicable loan type and a pricing grid set forth in the Credit Agreement and vary according to the credit ratings of the Company. The borrowing under the 364-day delayed draw term loan tranche matures 364 days after the initial funding thereof, and the borrowing under the two-year delayed draw term loan tranche matures two years after the initial funding thereof.
The Credit Agreement contains customary representations and warranties and customary covenants of the Company and certain restricted subsidiaries of the Company, including, among others, limitations on the creation of liens, limitations on mergers and other fundamental changes and restrictions on the incurrence of indebtedness by restricted subsidiaries. The Company has agreed to maintain a ratio of total funded debt to total capitalization of no greater than 65%, measured at the end of each fiscal quarter of the Company and calculated as set forth in the Credit Agreement. Upon the occurrence of certain events of default, the Company’s obligations under the Credit Agreement may be accelerated. Such events of default include payment defaults, breach of covenant defaults, certain change of control events, certain cross defaults under other indebtedness obligations and other customary default triggers.
The above description of the material terms and conditions of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement, which is filed as Exhibit 10.1 hereto.
Relationships
Certain of the Lenders and their respective affiliates have, from time to time, performed, and may in the future perform, various banking and financial services for the Company and its affiliates, for which they may receive customary fees and expenses.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth under Item 1.01 above is hereby incorporated into this Item 2.03 by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| * | Certain annexes, schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant undertakes to furnish supplemental copies of any of the omitted annexes, schedules and exhibits to the U.S. Securities and Exchange Commission upon its request. |
