Debt | 9 Months Ended |
Jan. 31, 2015 |
Debt Disclosure [Abstract] | |
Debt | DEBT |
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As of January 31, 2015 and April 30, 2014, the Company had the following debt obligations: |
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| January 31, | | April 30, | | | | | | | | | | | | |
2015 | 2014 | | | | | | | | | | | | |
Second Lien Credit Facility | $ | 175,000 | | | $ | 175,000 | | | | | | | | | | | | | |
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Debt discount related to Second Lien Credit Facility | (2,639 | ) | | (3,296 | ) | | | | | | | | | | | | |
First Lien RBL | 44,000 | | | — | | | | | | | | | | | | | |
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Savant Promissory Notes payable | 2,000 | | | — | | | | | | | | | | | | | |
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Gunsight Promissory Note payable | — | | | 950 | | | | | | | | | | | | | |
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Apollo prepayment and extension fee note payable | 2,306 | | | 9,223 | | | | | | | | | | | | | |
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Capital lease obligation | 2,756 | | | — | | | | | | | | | | | | | |
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Series B Preferred Stock | 2,382 | | | 2,325 | | | | | | | | | | | | | |
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Total debt obligations | 225,805 | | | 184,202 | | | | | | | | | | | | | |
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Less: Current maturities | (29,553 | ) | | (9,459 | ) | | | | | | | | | | | | |
Total debt less current maturities | $ | 196,252 | | | $ | 174,743 | | | | | | | | | | | | | |
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As of January 31, 2015, the Company's current maturities of long term debt related to amounts that are due to our lenders within the next twelve months in accordance with provisions in the underlying agreements. |
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Second Lien Credit Facility |
On February 3, 2014, the Company refinanced its $100,000 credit facility with Apollo Investment Corp. ("Apollo") (the "Prior Credit Facility") by entering into a new Credit Agreement (as amended, the "Second Lien Credit Agreement") among the Company, as borrower, Apollo, as administrative agent (in that capacity, the "Second Lien Agent"), and Apollo and certain affiliates of Highbridge Capital Strategies (the "Second Lien Lenders") which set forth the terms of a credit facility of $175,000 (as amended, the "Second Lien Credit Facility"). |
The Second Lien Credit Agreement provides for a $175,000 term credit facility, all of which was made available to and drawn by the Company on the closing date. The amounts drawn were subject to a 2% original issue discount. Absent an event of default, amounts outstanding under the Second Lien Credit Facility bear interest at a rate of LIBOR plus 9.75%, subject to a 2% LIBOR floor. Under the terms of the Second Lien Credit Facility, Miller was permitted to enter into a reserve-based revolving credit facility on certain agreed terms which would be secured on a first-lien basis. Upon entering into such revolving credit facility and a related intercreditor agreement, the Second Lien Credit Facility would become a second-lien credit facility. The Company entered into a credit agreement for a revolving credit facility (the "First Lien Loan Agreement"), among the Company, as borrower, KeyBank National Association ("KeyBank"), as administrative agent (in that capacity the "RBL Administrative Agent"), and the lenders from time to time party thereto (the "RBL Lenders") on June 2, 2014. The First Lien Loan Agreement provides for a senior secured, reserve-based revolving credit facility of up to $250,000 (the "First Lien RBL"). In connection with the Company's entry into the First Lien Loan Agreement, we amended the Second Lien Credit Agreement. The Second Lien Credit Facility carries a four year maturity. The Second Lien Credit Facility contains covenants, including but not limited to, a leverage ratio, interest coverage ratio, current ratio, asset coverage ratio, minimum gross production and change of management control covenants, as well as other covenants customary for a transaction of this type. As of January 31, 2015, there was an event of default under the Second Lien Credit Facility arising from a delay in our issuing a mortgage in favor of the Second Lien Lenders covering a right-of-way lease underlying our North Fork Pipeline (the "Second Lien Technical Default"). Additionally, the Company was not in compliance with certain of the required financial covenants as of January 31, 2015 (the "Second Lien Covenant Default"), although the Company was in compliance with the production covenant and other covenants. The Second Lien Technical Default and Second Lien Covenant Default were waived or otherwise remedied by the March 2015 Second Lien Amendment (as defined below under Note 16, Subsequent Events). While we believe we will comply with the covenants in the Second Lien Credit Facility for the next twelve months, if we are unable to do so or are unable to obtain a waiver from our lender, our debt would become immediately due and payable and we would not be able to utilize our assets to satisfy our obligations. |
The Company used $75,306 of the proceeds drawn under the Second Lien Credit Facility to refinance the Prior Credit Facility with Apollo and $56,577 to finance the acquisition of the North Fork unit. In addition, $3,071 was used to retire the obligations owed under the MEI loan documents. The remainder of the proceeds from the Second Credit Facility were used for general corporate purposes. The fair value of the outstanding balance of the Second Lien Credit Facility was $171,525 and $176,785 as of January 31, 2015 and April 30, 2014, respectively, as calculated using the discounted cash flows method. Level 3 inputs were used to calculate the fair value of the outstanding balance of the Second Lien Credit Facility. |
On the closing date, in connection with the Second Lien Credit Facility, the Company, along with all of its then consolidated subsidiaries (other than MEI), entered into an Amended and Restated Guarantee and Collateral Agreement (the "Second Lien Guarantee") with Apollo, for the benefit of the lenders from time to time party to the Second Lien Credit Agreement. Under the terms of the Second Lien Guarantee and related security documents, each of the Company's consolidated subsidiaries (other than MEI and Nutaaq Pipeline, LLC) have guaranteed our obligations under the Second Lien Credit Facility and we and those subsidiaries have granted a security interest in substantially all of their assets to secure the performance of the obligations arising under the Second Lien Credit Facility. |
On June 2, 2014, the Company entered into the Amendment No. 1 to Credit Agreement and Guarantee and Collateral Agreement to the Second Lien Credit Facility and the Second Lien Guarantee. This amendment conforms certain of the covenants, terms and conditions in the Second Lien Credit Facility to match those of the First Lien RBL, including the financial covenants. |
On August 11, 2014, the Company entered into Amendment No. 2 to the Second Lien Credit Agreement, which amended a default provision to remove its reference to David Voyticky, our former president. Prior to this amendment, under the Second Lien Credit Agreement, the resignation of Mr. Voyticky would have been a default. In addition, this amendment removed references to Mr. Voyticky from certain defined terms used in the Second Lien Credit Agreement. |
On August 19, 2014, the Company entered into Amendment No. 3 to the Second Lien Credit Agreement, which (i) increased the total amount of obligations we may enter into under capital leases from time to time, (ii) allowed us to make certain investments in Savant, and (iii) increased the amount of preferred stock that we may issue, among other things. |
On December 10, 2014, the Company entered into Waiver and Amendment No. 4 to Credit Agreement and Amendment No. 2 to Guarantee and Collateral Agreement (the "December Second Lien Amendment") to our Second Lien Credit Agreement and our Second Lien Guarantee. The December Second Lien Amendment, among other things, (1) makes conforming amendments to our leverage and interest covenants, matching those in the December First Lien Amendment (as defined below), (2) establishes approved plans of development (the "Plans"), defines "Permitted Capital Expenditures," adds requirements for the development of our drilling program with those Plans and restricts our ability to engage in capital expenditures other than Permitted Capital Expenditures, (3) permits us to issue an additional $25,000 in preferred stock, measured in terms of the stated liquidation preference of that stock (as with the December First Lien Amendment, up to $50,000 in stated liquidation preference in total), (4) adjusts the percentage by value of our oil and gas properties that must be the subject of mortgages in favor of the Second Lien Agent (for the benefit of the Second Lien Lenders) from 80% to 90%, (5) includes Mr. Carl F. Giesler, Jr., our Chief Executive Officer, as one of the officers designated in the definition of "Change of Control" under the Second Lien Credit Agreement, (6) eliminates restrictions on the sale of equity interests by Mr. Deloy Miller without impacting the "Change of Control" definition therein, (7) provides waivers related to certain events of default which arose as a result of Mr. Scott M. Boruff’s resignation as our Chief Executive Officer and certain sales of equity interests by Mr. Boruff as well as in connection with a scheduled payment of dividends on our preferred stock that occurred while an event of default had occurred; (8) extends the date by which the Company must remediate the material weakness in its internal controls over financial reporting from April 30, 2015 to April 30, 2016, (9) waives the requirement that the proceeds of the sale of (i) certain miscellaneous oil and gas equipment and office supplies in Tennessee or (ii) interests in the oil and gas properties of Savant, be applied to prepay the loans under the Second Lien Credit Agreement, so long as those proceeds are applied to certain projects specified in the Plans, (10) makes certain technical amendments intended to allow us to close the acquisition of Savant by easing certain requirements (which would have applied after that acquisition in the absence of the December Second Lien Amendment) related to its subsidiary, Nutaaq Pipeline, LLC, (11) increases the interest rate applicable to loans under the Second Lien Credit Agreement by 1% per annum (or, if the Company elects to pay such interest in kind, by 2% per annum) until the Company has raised $20,000 in net proceeds from the issuance of equity interests of the Company, provided that if the Company has not raised such amounts within four months, the change in the interest rate becomes permanent and (12) adds additional events of default. |
First Lien RBL |
On June 2, 2014, Miller entered into the First Lien Loan Agreement, among the Company, as borrower, KeyBank, as the RBL Administrative Agent, and the RBL Lenders. In addition to KeyBank, the syndicate includes CIT Finance LLC, Mutual of Omaha Bank and OneWest Bank N.A. |
The First Lien Loan Agreement provides for a $250,000 senior secured, reserve-based revolving credit facility, $60,000 of which was made available to the Company on the closing date. The borrowing base will be redetermined semi-annually on February 1st and August 1st of each year. Amounts outstanding under the First Lien RBL are priced on a sliding scale, based on LIBOR plus 300 to 400 basis points, depending upon the level of borrowing (per the table below). |
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Borrowing Base Utilization Grid | | | | | | | | | | | | | | |
Borrowing base utilization percentage | <25% | ≥ 25%, but <50% | ≥ 50%, but <75% | ≥ 75%, but <90% | ≥ 90%, but ≤100% | | | | | | | | | | | | | | |
Spread above LIBOR | 3.00% | 3.25% | 3.50% | 3.75% | 4.00% | | | | | | | | | | | | | | |
Undrawn commitment fee rate | 0.50% | 0.50% | 0.75% | 0.75% | 0.75% | | | | | | | | | | | | | | |
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The First Lien RBL will expire on the third anniversary of its closing. It contains customary covenants, including, but not limited to, a leverage, interest coverage, current ratio, minimum gross production, minimum liquidity, asset coverage and change of management control covenants. Due to the existence of the Second Lien Technical Default which arose due to a delay in our issuing mortgage in favor of the Second Lien Lenders coving a right-of-way lease underlying our North Fork Pipeline, there was an event of default under the First Lien Loan Agreement's cross default provision (the "First Lien Technical Default"). Additionally, the Company was not in compliance with (1) a related covenant to issue a mortgage covering that right-of-way lease in favor of the RBL Lenders and (2) certain of the required financial covenants as of January 31, 2015 (the "First Lien Covenant Default"), although the Company was in compliance with the production covenant and other covenants. While we believe we will comply with the covenants in the First Lien Credit Facility for the next twelve months, if we are unable to do so or are unable to obtain a waiver from our lender, our debt would become immediately due and payable and we would not be able to utilize our assets to satisfy our obligations. The First Lien Technical Default and First Lien Covenant Default were waived or otherwise remedied by the March 2015 First Lien Amendment (as defined below in Note 16, Subsequent Events). |
The Company drew $20,000 on the closing date under the First Lien RBL, which was used to provide working capital for development drilling in Alaska. The amounts available were subject to an upfront fee equal to 1% of the initial borrowing base. On June 20, 2014, Miller requested an additional $10,000, which was funded on June 24, 2014. On August 1, 2014, the Company drew down $16,000. On December 11, 2014, the Company drew $3,000 down and an additional $5,000 on December 31, 2014. The Company repaid borrowings of $10,000 during the nine months ended January 31, 2015. The fair value of floating-rate debt approximates the carrying amount because the interest rates paid are based on short-term maturities. |
Also on June 2, 2014, in connection with the First Lien RBL, the Company, along with all of its then consolidated subsidiaries (other than MEI and Miller Energy Colorado 2014-1, LLC), entered into a First Lien Guarantee and Collateral Agreement (the "First Lien Guarantee") with KeyBank, for the benefit of the RBL Lenders from time to time party to the First Lien Loan Agreement. Under the terms of the First Lien Guarantee and related security documents, each of the Company's consolidated subsidiaries (other than MEI and Nutaaq Pipeline, LLC) have guaranteed the obligations under the First Lien RBL. Along with the aforementioned subsidiaries, Miller has granted a security interest in substantially all of its assets to secure the performance of the obligations arising under the First Lien RBL. |
On August 11, 2014, the Company entered into the First Amendment to our First Lien Loan Agreement, which amended a default provision to remove its reference to Mr. Voyticky. Prior to this amendment, under the First Lien Loan Agreement, the resignation of Mr. Voyticky would have been a default. In addition, this amendment removes references to Mr. Voyticky from certain defined terms used in the First Lien Loan Agreement. |
On August 19, 2014, the Company entered into the Second Amendment to our First Lien Loan Agreement, which (i) increases the total amount of obligations we may enter into under capital leases from time to time, (ii) allows us to make certain investments in Savant, and (iii) increases the amount of preferred stock that we may issue, among other things. |
On December 10, 2014, the Company entered into a Third Amendment (the "December First Lien Amendment") to the First Lien Credit Agreement and the First Lien Guarantee. The December First Lien Amendment, among other things, (1) amends our leverage and interest covenants, (2) establishes the Plans, defines "Permitted Capital Expenditures," adds requirements for the development of the our drilling program within those Plans and restricts our ability to engage in capital expenditures other than Permitted Capital Expenditures, in each case in a manner consistent with the December Second Lien Amendment, (3) permits us to issue an additional $25,000 in preferred stock, measured in terms of the stated liquidation preference of that stock (up to $50,000 in stated liquidation preference in total), (4) adjusts the percentage by value of our oil and gas properties that must be the subject of mortgages in favor of the RBL Administrative Agent (for the benefit of the RBL Lenders) from 80% to 90%, (5) includes Mr. Carl F. Giesler, Jr., our Chief Executive Officer, as one of the officers designated in the definition of "Change of Control," (6) eliminates restrictions on the sale of equity interests by Mr. Deloy Miller without impacting that "Change of Control" definition, (7) provides waivers related to certain events of default which arose as a result of Mr. Scott M. Boruff’s resignation as our Chief Executive Officer and certain sales of equity interests by Mr. Boruff as well as in connection with the scheduled payment of dividends on our preferred stock that occurred while an event of default had occurred, (8) extends the date by which the Company must remediate the material weakness in its internal controls over financial reporting from April 30, 2015 to April 30, 2016, but requires an additional borrowing base redetermination, unless waived by the majority of the RBL Lenders, in the event our April 30, 2015 audited financial statements are issued with any qualification as to the effectiveness of our internal controls over financial reporting, (9) makes certain technical amendments intended to allow us to close the acquisition of Savant by easing certain requirements (which would have applied after that acquisition in the absence of this First Lien Amendment) related to its subsidiary, Nutaaq Pipeline, LLC, (10) requires that we not permit the aggregate revolving credit exposure of the RBL Lenders to exceed $50,000 in the aggregate prior to next redetermination date for our borrowing base, scheduled for February 1, 2015 and (11) required that, following receipt of our tax credit payment from the State of Alaska in February of 2015, we not allow the aggregate revolving credit exposure of the RBL Lenders to exceed $40,000. |
Savant Promissory Notes Payable |
As merger consideration for the Savant acquisition, three $1,000 promissory notes were issued to the former owners of Savant Alaska, LLC. The notes mature on December 18, 2014, February 28, 2015 and June 30, 2015. The Company had $2,000 of promissory notes outstanding at January 31, 2015. The December 18, 2014 promissory note was paid and, subsequent to January 31, 2015, the February 28, 2015 promissory note was paid. These promissory notes do not bear any interest if paid on or before the maturity date. Any payment of the promissory note not paid on or before the maturity date shall bear interest at the default interest rate of 1.5% per month. No interest has been paid on the promissory notes. |
Series B Preferred Stock |
The outstanding Series B Preferred Stock is classified as long-term debt in accordance with ASC 480, "Distinguishing Liabilities from Equity." As of January 31, 2015 and April 30, 2014, the fair value of Series B Preferred Stock was $2,075 and $2,197, respectively, as calculated using the discounted cash flow method. The fair value of the Series B Preferred Stock is classified as a Level 3 measurement as the fair value is calculated using a discounted cash flow model. |
The following table summarizes the Series B Preferred Stock dividend activity for the nine months ended January 31, 2015. |
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Series | | Declaration Date | | Dividend per Share | | Annualized Percentage Rate | | Par Value | | Accrual Period | | Record Date | | Payment Date |
B | | July 28, 2014 | | $ | 6.05 | | | 12 | % | | $ | 100 | | | Mar. 1 - Aug. 31, 2014 | | August 15, 2014 | | September 2, 2014 |
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B | | January 30, 2015 | | $ | 5.95 | | | 12 | % | | $ | 100 | | | Sept. 1, 2014 - Feb. 28, 2015 | | February 13, 2015 | | March 2, 2015 |
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Debt Issue Costs |
As of January 31, 2015 and April 30, 2014, the Company's unamortized deferred financing costs were $3,364 and $803, respectively, which relates to the First Lien RBL and the Second Lien Credit Facility. These costs are being amortized over the term of the respective debt instruments. |