Resaca Exploitation secures $200m funding to clear the way for Cano merger
04 February 2010
US focused oil and gas group Resaca Exploitation has secured a new $200 million senior revolving credit facility to ease the finances surrounding its recent agreement to merge with fellow American group, Cano Petroleum.
Specifically, the funding will be used to repay and refinance the debts of both companies as well as provide room to make further acquisitions and fund general corporate costs.
The Cano merger, which was announced last September, is subject to a number of closing conditions, including refinancing existing bank debt, and the latest funding deal is expected to satisfy this closing condition.
An initial borrowing base of $90 million has been established based on the two companies’ combined reserves. Based on values assigned to crude oil and natural gas properties which may be either acquired or discovered over time, the company's borrowing base may be increased up to a maximum of $200 million.
Jay Lendrum, Resaca’s chief executive, said: “We believe the new credit facility will allow the Company to make accretive oil and gas property acquisitions following the Cano merger to further our exploitation strategy and enhance shareholder value.”
Union Bank is acting as lead arranger and administrative agent for the new facility.
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