| Item 1.01 | Entry Into a Material Definitive Agreement. |
On June 21, 2019 (the “Restatement Date”), SandRidge Energy, Inc. (the “Company”) amended and restated its existing reserve-based revolving credit facility among the Company, certain of its subsidiaries, the lenders party thereto, and Royal Bank of Canada, as administrative agent (the “Restatement”). In order to effectuate the Restatement, the Company entered into an amendment to the existing credit agreement (the “Existing Credit Agreement”, and as amended and restated, the “Restated Credit Facility”) to, among other things:
| | • | | extend the maturity date to April 1, 2021 from March 31, 2020; |
| | • | | exchange the existing commitments in an aggregate principal amount of $600.0 million as of the Restatement Date and outstanding loans thereunder for an equal aggregate principal amount of commitments and loans with certain continuing lenders and new lenders; |
| | • | | establish a facility limit equal to the least of the borrowing base thereunder, initially equal to $300.0 million as of the Restatement Date, the aggregate elected commitment amount of the lenders, initially equal to $270.0 million as of the Restatement Date, and the aggregate commitments of the lenders, which is $600.0 million as of the Restatement Date; |
| | • | | reduce the interest rate from a pricing grid tied to the borrowing base utilization ratio of (A) LIBOR plus an applicable margin that varies from 300 to 400 basis points or (B) the base rate plus an applicable margin that varies from 200 to 300 basis points to a pricing grid tied to the elected commitment utilization ratio of (A) LIBOR plus an applicable margin that varies from 200 to 300 basis points or (B) the base rate plus an applicable margin that varies from 100 to 200 basis points; |
| | • | | reduce the proportion of the Company’s proved reserves required to be subject to first-priority mortgages to 85% of thePV-9 valuation of all proved reserves included in the most recently delivered reserve report of the Company from 95%; and |
| | • | | provide for the issuance of up to $10.0 million of borrowings onsame-day notice, referred to as a swing line loan. |
The initial borrowing base under the Restated Credit Facility is $300.0 million and the next scheduled borrowing base redetermination is scheduled for October 1, 2019, followed by scheduled semiannual borrowing base redeterminations thereafter. As of the Restatement Date, the aggregate elected commitment amount under the Restated Credit Facility is $270.0 million, which the Company may reduce at its election or increase by causing the elected commitment of an existing lender to increase or by causing anon-lender party to become a lender under the Restated Credit Facility.
The Restated Credit Facility is secured by (i) first-priority mortgages on at least 85% of thePV-9 valuation of all proved reserves included in the most recently delivered reserve report of the Company, (ii) a first-priority perfected pledge of substantially all of the capital stock owned by each credit party and equity interests in the SandRidge Mississippian Trust I and SandRidge Mississippian Trust II that are owned by a credit party and (iii) a first-priority perfected security interest in substantially all the cash, cash equivalents, deposits, securities and other similar accounts, and other tangible and intangible assets of the credit parties (including but not limited toas-extracted collateral, accounts receivable, inventory, equipment, general intangibles, investment property, intellectual property, real property and the proceeds of the foregoing). Other than in respect of the first-priority mortgages, which such requirement was reduced as detailed above, such terms are materially similar as those contained in the Existing Credit Facility.
The Restated Credit Facility requires the company to, commencing with the first full quarter ending after the Restatement Date, maintain (i) a maximum consolidated total net leverage ratio, measured as of the end of any fiscal quarter, of no greater than 3.50 to 1.00 and (ii) a minimum consolidated interest coverage ratio, measured as of the end of any fiscal quarter, of no less than 2.25 to 1.00. Such financial covenants are subject to customary cure rights.
