| |
For each revolving loan, the interest rate
will be, at the Company's option, (1) the Eurodollar Rate, plus
an applicable margin equal to 2.375% if the amount borrowed is greater
than or equal to 90% of the Facility A Borrowing Base, 2.0% if the
amount borrowed is less than 90%, but greater than or equal to 50%
of the Facility A Borrowing Base, or 1.625% if the amount borrowed
is less than 50% of the Facility A Borrowing Base; or (2) the Base
Rate, plus an applicable margin of 0.375% if the amount borrowed
is greater than or equal to 90% of the Facility A Borrowing Base.
The interest rate on each term loan will be, at the Company's option,
(1) the Eurodollar Rate, plus an applicable margin to be determined
by the lenders; or (2) the Base Rate, plus an applicable margin
to be determined by the lenders. Interest on Eurodollar Loans is
payable on either the last day of each Eurodollar option period
or monthly, whichever is earlier. Interest on Base Rate Loans is
payable monthly.
The Company is subject to certain covenants
under the terms of the Credit Facility, including, but not limited
to the maintenance of the following financial covenants: (1) a minimum
current ratio of 1.0 to 1.0 (including availability under the borrowing
base), (2) a minimum quarterly debt services coverage of 1.25 times,
(3) a minimum shareholders equity equal to $100.0 million, plus
100% of all subsequent common and preferred equity contributed by
shareholders' subsequent to June 30, 2004, plus 50% of all positive
earning occurring subsequent to June 30, 2004, plus, 180 days after
issuance of any second-lien subordinated debt with another lender
("the Secured Subordinated Debt"), an amount equal to the difference,
if positive, of (A) 50% of the net proceeds from the issuance less
(B) 100% of all common and preferred equity contributed by shareholders
from September 30, 2004 to the date of the issuance of any Secured
Subordinated Debt, and (4) a maximum total recourse debt to EBITDA
ratio (as defined in the Credit Facility) of not more than 3.0 to
1.0. The Credit Facility also places restrictions on additional
indebtedness, dividends to shareholders, liens, investments, mergers,
acquisitions, asset dispositions, asset pledges and mortgages, change
of control, repurchase or redemption for cash of the Company's common
stock, speculative commodity transactions and other matters.
In connection with the Senior Secured Notes
Purchase Agreement, we amended the Credit Facility including without
limitation, to: (1) amend the covenant regarding maintenance of
a minimum shareholders' equity, (2) add a new covenant requiring
maintenance of a minimum EBITDA to interest expense ratio and (3)
add other provisions and a consent which allow for the indebtedness
incurred under the Senior Secured Notes.
On November 7, 2004, we determined that, as
of September 30, 2004, we were not in compliance with the minimum
current ratio covenant in the Credit Facility. We cured the noncompliance
on October 29, 2004 with the issuance of the Senior Secured Notes.
On November 10, 2004, the lenders under the Credit Facility agreed
in a letter to the Company to waive the noncompliance period from
September 30, 2004 through October 29, 2004.
At December 31, 2003, amounts outstanding under
the Prior Credit Facility totaled $7.0 million with an additional
$12.0 million available for future borrowings. At December 31, 2004,
amounts outstanding under the Credit Facility totaled $18.0 million,
with an additional $12.0 million available for future borrowings.
At December 31, 2003, no letters of credit were issued and outstanding
under the Prior Credit Facility. At December 31, 2003 and 2004,
no letters of credit were issued and outstanding under the prior
Credit Facility and the Credit Facility, respectively.
Rocky Mountain Gas, Inc. Note
On June 29, 2001, CCBM, Inc. issued a non-recourse
promissory note payable in the amount of $7.5 million to RMG as
consideration for certain interests in oil and natural gas leases
held by RMG in Wyoming and Montana. The RMG note was payable in
41-monthly principal payments of $0.1 million plus interest at 8%
per annum commencing July 31, 2001 with the balance due December
31, 2004, all of which have been paid. The RMG note was secured
solely by CCBM's interests in the oil and natural gas leases in
Wyoming and Montana. In connection with the Company's investment
in Pinnacle Gas Resources, Inc., the Company received a reduction
in the principal amount of the RMG note of approximately $1.5 million
and relinquished the right to certain revenues related to the properties
contributed to Pinnacle. During the second quarter of 2004, CCBM
relinquished a portion of its interests in certain oil and natural
gas leases to RMG and reduced the principal due on the RMG note
by $0.3 million.
Capital Leases
In December 2001, the Company entered into
a capital lease agreement secured by certain production equipment
in the amount of $0.2 million. The lease was payable in one payment
of $11,323 and 35 monthly payments of $7,549 including interest
at 8.6% per annum. In October 2002, the Company entered into a capital
lease agreement secured by certain production equipment in the amount
of $0.1 million. The lease is payable in 36 monthly payments of
$3,462 including interest at 6.4% per annum. In May 2003, the Company
entered into a capital lease agreement secured by certain production
equipment in the amount of $0.1 million. The lease is payable in
36 monthly payments of $3,030 including interest at 5.5% per annum.
In August 2003, the Company entered into a capital lease agreement
secured by certain production equipment in the amount of $0.1 million.
The lease is payable in 36 monthly payments
|
|
