UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): APRIL 7, 2006
LINN ENERGY, LLC
(Exact name of registrant as specified in its charter)
DELAWARE 000-51719 65-1177591
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
650 WASHINGTON ROAD, 8TH FLOOR
PITTSBURGH, PENNSYLVANIA 15228
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (412) 440-1400
NOT APPLICABLE
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Linn Energy, LLC (the "Company") entered into a new $400.0 million Amended and
Restated Credit Agreement (the "Credit Agreement") dated as of April 7, 2006,
among the Company, BNP Paribas, as administrative agent, Royal Bank of Canada
and Societe Generale, as syndication agents, Bank of America, N.A. and Comerica
Bank, as documentation agents, and Bank of Scotland, Fortis Capital Corp. and
Lehman Commercial Paper Inc., which replaced our prior credit agreement. The
Credit Agreement matures on April 13, 2009. The amount available for borrowing
at any one time is limited to the borrowing base, which as of the effective date
was initially set at $235.0 million. The borrowing base will be redetermined
semi-annually by the lenders in their sole discretion, based on, among other
things, reserve reports as prepared by reserve engineers taking into account the
natural gas and oil prices at such time. Our obligations under the Credit
Agreement are secured by mortgages on our natural gas and oil properties as well
as a pledge of all ownership interests in our operating subsidiaries. We are
required to maintain the mortgages on properties representing at least 80% of
our natural gas and oil properties. Additionally, the obligations under the
Credit Agreement are guaranteed by all of our operating subsidiaries and may be
guaranteed by any future subsidiaries.
Borrowings under the Credit Agreement are available for acquisition and
development of natural gas and oil properties, working capital and general
corporate purposes. At our election, interest is determined by reference to:
o the London interbank offered rate ("LIBOR") plus an applicable margin
between 1.00% and 1.75% per annum; or
o a domestic bank rate plus an applicable margin between 0% and 0.25%
per annum.
Interest is generally payable quarterly for domestic bank rate loans and at the
applicable maturity date for LIBOR loans. The Credit Agreement contains various
covenants that limit our ability to:
o incur indebtedness;
o grant certain liens;
o make certain loans, acquisitions, capital expenditures and
investments;
o make distributions other than from available cash;
o merge or consolidate; or
o engage in certain asset dispositions, including a sale of all or
substantially all of our assets.
The Credit Agreement also contains covenants that, among other things, require
us to maintain specified ratios as follows:
o consolidated net income plus interest expense, income taxes,
depreciation, depletion, amortization and other similar charges, minus
all non-cash income added to consolidated net income, and giving pro
forma effect to any acquisitions or capital expenditures, to interest
expense of not less than 2.5 to 1.0; and
o consolidated current assets, including the unused amount of the total
commitments, to consolidated current liabilities of not less than 1.0
to 1.0, excluding non-cash assets and obligations under SFAS No. 133,
which includes the current portion of natural gas and interest rate
swaps.
We have the ability to borrow under the Credit Agreement to pay distributions to
unitholders as long as there has not been a default or event of default and if
the amount of borrowings outstanding under our Credit Agreement is less than 90%
of the borrowing base. The Credit Agreement does not require the Company to
provide audited consolidated financial statements for the year ended December
31, 2005 until May 31, 2006.
If an event of default exists under the credit agreement, the lenders will be
able to accelerate the maturity of the credit agreement and exercise other
rights and remedies. Each of the following will be an event of default:
o failure to pay any principal when due or any interest, fees or other
amount within certain grace periods;
o a representation or warranty is proven to be incorrect when made;
o failure to perform or otherwise comply with the covenants in the
credit agreement or other loan documents, subject, in certain
instances, to certain grace periods;
o default by us on the payment of any other indebtedness in excess of
$1.0 million, or any event occurs that permits or causes the
acceleration of the indebtedness;
o bankruptcy or insolvency events involving us or our subsidiaries;
o the entry of, and failure to pay, one or more adverse judgments in
excess of $1.0 million or one or more non-monetary judgments that
could reasonably be expected to have a material adverse effect and for
which enforcement proceedings are brought or that are not stayed
pending appeal;
o specified events relating to our employee benefit plans that could
reasonably be expected to result in liabilities in excess of $1.0
million in any year; and
o a change of control, which includes (1) a decrease to 25% or less of
our management's and Quantum Energy Partners' aggregate ownership in
us combined with the acquisition by a third party of more than 35% of
our units, or (2) the replacement of a majority of our directors by
persons not approved by our Board of Directors.
The description of the Credit Agreement set forth under this Item 1.01 is
qualified in its entirety by reference to the complete terms and conditions of
the Credit Agreement itself, which is filed as Exhibit 10.1 hereto and is hereby
incorporated herein by reference.
ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.
In connection and simultaneously with the execution of the Credit Agreement
disclosed under Item 1.01 of this Current Report on Form 8-K, the Company
terminated that certain $300.0 million credit agreement (the "2005 Credit
Agreement") dated as of April 13, 2005, as amended, among the Company, BNP
Paribas as administrative agent, and the other financial institutions named and
defined therein as lenders and agents. The amount available for borrowing at any
one time under the 2005 Credit Agreement was limited to the borrowing base,
which was $225.0 million as of the effective date of the Credit Agreement
disclosed under Item 1.01 above. At our election, interest was determined under
the 2005 Credit Agreement by reference to:
o the London interbank offered rate ("LIBOR") plus an applicable margin
between 1.25% and 1.875% per annum; or
o a domestic bank rate plus an applicable margin between 0% and 0.375%
per annum.
Except as disclosed in this Item 1.02, other terms and conditions of the 2005
Credit Agreement were substantially similar to the terms and conditions of the
Credit Agreement described above in Item 1.01, which terms and conditions set
forth above in Item 1.01 of this Current Report on Form 8-K are hereby
incorporated herein by reference in response to this Item 1.02.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The information disclosed or incorporation by reference in Item 1.01 of this
Current Report on Form 8-K is hereby incorporated herein by reference in
response to this Item 2.03.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) EXHIBITS.
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
Exhibit 10.1 Amended and Restated Credit Agreement (the "Credit
Agreement") dated as of April 7, 2006, among Linn
Energy, LLC, as borrower, BNP Paribas, as
administrative agent, Royal Bank of Canada and
Societe Generale, as syndication agents, Bank of
America, N.A. and Comerica Bank, as documentation
agents, and the lenders party thereto
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Linn Energy, LLC
Date: April 13, 2006 /s/ Kolja Rockov
-----------------------------------
Kolja Rockov
Executive Vice President and
Chief Financial Officer
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
Exhibit 10.1 Amended and Restated Credit Agreement (the "Credit
Agreement") dated as of April 7, 2006, among Linn
Energy, LLC, as borrower, BNP Paribas, as
administrative agent, Royal Bank of Canada and
Societe Generale, as syndication agents, Bank of
America, N.A. and Comerica Bank, as documentation
agents, and the lenders party thereto