| Loans payable | 7. Loans payable As of the dates indicated, our third-party debt consisted of the following:
June 30,
December 31,
2016
2015
Fixed and floating rate loans
(in thousands)
2017 Notes
$
34,350
$
34,400
2017 Notes - Related Party
20,650
20,600
Senior Credit Facility
24,243
32,075
Unamortized deferred financing cost - Senior Credit Facility and 2017 Notes
(892
)
(1,260
)
TBNG credit facility
872
5,192
ANBE Note
3,593
3,592
West Promissory Notes
1,000
1,000
Loans payable
83,816
95,599
Less: current portion
28,816
40,599
Long-term portion
$
55,000
$
55,000
Senior Credit Facility On May 6, 2014, certain of our wholly owned subsidiaries entered into the Senior Credit Facility with BNP Paribas and IFC. The Senior Credit Facility is guaranteed by us and each of TransAtlantic Petroleum (USA) Corp. (“TransAtlantic USA”) and TransAtlantic Worldwide, Ltd. (each, a “Guarantor”). The borrowing base amount is re-determined semi-annually on April 1st and October 1st of each year. The April 1, 2016 redetermination resulted in a $5.4 million borrowing base and a $18.8 million borrowing base deficiency under the Senior Credit Facility as of June 30, 2016.
·
the debt value which results in the field life coverage ratio for such calculation date being 1.50 to 1.00; and
·
the debt value which results in the loan life coverage ratio for such calculation date being 1.30 to 1.00. On April 19, 2016, we entered into the Second Waiver and Consent with BNP Paribas and IFC, which granted us a conditional waiver of defaults under the Senior Credit Facility and permitted the borrowers to make certain limited transfers and withdrawals from the collection accounts pledged to the Lenders under the Senior Credit Facility. The Second Waiver and Consent included certain conditions, including the following:
(i)
The borrowing base deficiency must be repaid by September 30, 2016 (provided that the Lenders may, in their sole and absolute discretion, agree in writing to extend such date to December 31, 2016);
(ii)
All monthly hedge settlement proceeds shall be used to pay down debt outstanding under the Senior Credit Facility;
(iii)
Net proceeds from certain asset sales shall be used to prepay loans outstanding under the Senior Credit Facility;
(iv)
On or before May 15, 2016, the Company shall have entered into a binding purchase and sale agreement for the sale of all of the equity interests in, or all or substantially all of the assets of, TBNG;
( v)
By June 30, 2016, the Lenders shall be granted a security interest over all of the equity interest in, and assets and property of, TBNG; and
(v i )
On or before September 30, 2016, all holders of the 2017 Notes shall either (a) convert their debt interest under the 2017 Notes into equity interest, or (b) agree to extend the maturity of the 2017 Notes to April 1, 2019 or later on substantially identical terms. Pursuant to the Second Waiver and Consent, as of April 19, 2016, the Lenders’ aggregate commitments were reduced to $30.5 million, with individual commitments of $15.2 million each, and shall be further reduced by the amount of any payments under the Senior Credit Facility. During the Waiver Period, interest on the borrowing base deficiency will accrue at a rate of three-month LIBOR plus 7.00% per annum (7.63% at June 30, 2016). As of June 30, 2016, we had $24.2 million of outstanding borrowings under the Senior Credit Facility, a borrowing base deficiency of $18.8 million and no availability. In addition, we were not in compliance with certain covenants in the Second Waiver and Consent, including the requirement to enter into a binding purchase and sale agreement for TBNG by May 15, 2016. We continue to work with the Lenders to satisfy these conditions and restructure our Senior Credit Facility obligations. Subsequent to June 30, 2016, we repaid $0.9 million of principal under the Senior Credit Facility, reducing the outstanding balance to $23.3 million and the borrowing base deficiency to $17.9 million, as of August 8, 2016. In addition, as of June 30, 2016 and August 8, 2016, the Lenders held $7.2 million and $12.0 million, respectively, of restricted cash in our collection accounts in Turkey. As of August 8, 2016, we had granted a security interest in favor of the Lenders over all of the equity interests in, and moveable assets of, TBNG, and were in the process of granting a security interest in favor of the Lenders over all present and future receivables of TBNG. We are also in active negotiations with third party purchasers for the sale of TBNG. We have engaged Seaport Global Inc. as an independent advisor, and our management is actively pursuing alternate structures for the 2017 Notes. We have classified all borrowings under the Senior Credit Facility as short-term debt as of June 30, 2016 due to the uncertainty regarding our ability to comply with the covenants in the Senior Credit Facility for the next twelve months . 2017 Notes As of June 30, 2016, we had $55.0 The 2017 Notes bear interest at a rate of 13.0% per annum and mature on July 1, 2017. The 2017 Notes are convertible at any time, at the election of a holder, into our common shares at a conversion price of $6.80 per share. On June 30, 2016, we issued 2,905,737 common shares in a private placement to certain holders of the 2017 Notes, at the election of such holders to receive common shares in lieu of cash interest on the 2017 Notes (see Note 9, “Shareholders’ equity”). TBNG credit facility TBNG has a fully-drawn credit facility with a Turkish bank. During the second quarter of 2016, the facility was amended and the monthly principal installments were deferred until August 29, 2016. The facility may be prepaid without penalty. The facility is secured by a lien on a Turkish real estate property owned by Gundem Turizm Yatirim ve Isletmeleri Anonim Sirketi (“Gundem”), which is 97.5% beneficially owned by Mr. Mitchell and his children. At June 30, 2016, TBNG owed $0.9 million under the credit facility and had no availability. West Promissory Notes In August 2015, TransAtlantic USA entered into promissory notes (the “Promissory Notes”) with each of Mary West CRT 2 LLC and Gary West CRT 2 LLC, shareholders of the Company (collectively, the “Holders”), whereby TransAtlantic USA could borrow up to $1.5 million under each Promissory Note to fund our share repurchase program. The Holders are managed by Randy Rochman, an observer of our board of directors. On August 21, 2015, TransAtlantic USA borrowed $500,000 under each Promissory Note. Pursuant to the terms of the Promissory Notes, the Holders are granted a first priority lien and security interest in all of our common shares purchased under our share repurchase program. Loans under the Promissory Notes accrue interest at a rate of 9.00% per annum and mature on October 1, 2016. The Promissory Notes are guaranteed by us. As of June 30, 2016, we had borrowed $1.0 million under the Promissory Notes and had no availability. The funds were used to purchase our common shares pursuant to our share repurchase program. ANBE Note On December 30, 2015, TransAtlantic USA entered into a $5.0 million draw down convertible promissory note (the “Note”) with ANBE Holdings, L.P. (“ANBE”), an entity owned by the children of the Company’s chairman and chief executive officer, N. Malone Mitchell 3rd, and controlled by an entity managed by Mr. Mitchell and his wife. The Note bears interest at a rate of 13.0% per annum. On December 30, 2015, the Company borrowed $3.6 million under the Note (the “Initial Advance”) for general corporate purposes. On June 30, 2016, TransAtlantic USA entered into an extension of the Note (the “Extension”) with ANBE. The Extension extended the date on which the Company could request advances under the Note from June 15, 2016 to August 15, 2016 and extended the maturity date of the Note from June 30, 2016 to August 31, 2016. As of June 30, 2016, the Company had borrowed $3.6 million under the Note and had availability of $1.4 million. Advances under the Note may be converted, at the election of ANBE, any time after the NYSE MKT approves the Company’s application to list the additional common shares issuable pursuant to the conversion feature of the Note and prior to the maturity of the Note. The conversion price per common share for each advance is equal to 105% of the closing price of the Company’s common shares on the NYSE MKT on the trading date immediately prior to such advance. The conversion price of the Initial Advance is $1.3755 per share. On June 30, 2016, we issued 355,826 common shares in a private placement to ANBE in lieu of cash interest on the Note (see Note 9, “Shareholders’ equity”). |
