UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 8, 2015
NEW SOURCE ENERGY PARTNERS L.P.
(Exact name of registrant as specified in its charter)
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Delaware | 001-35809 | 38-3888132 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
914 North Broadway, Suite 230
Oklahoma City, Oklahoma 73102
(405) 272-3028
(Address of Principal Executive Offices, Including Zip Code)
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.
Letter Agreement
On April 8, 2015, New Source Energy Partners L.P. (the “Partnership”) entered into a letter agreement relating to the Credit Agreement governing the Partnership’s revolving credit facility, dated as of February 13, 2013, among the Partnership, Bank of Montreal (“BMO”), as administrative agent, and the lenders party thereto (the “Lenders”) (the “Credit Agreement”), by and among the Partnership, BMO and the Lenders (the “Letter Agreement”). Pursuant to the Letter Agreement, the April 1, 2015 scheduled semi-annual redetermination of the borrowing base was postponed until May 1, 2015. In addition, the borrowing base available under the revolving credit facility was reduced, effective April 8, 2015, from $90 million to $84 million, which was the amount of borrowings outstanding as of April 8, 2015. Unless the Partnership reduces total outstanding borrowings under the revolving credit facility to at least $55 million, the Letter Agreement also provides that:
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• | until May 1, 2015, the Partnership will not, and will not permit any subsidiary to, declare or make any restricted payment, including the Partnership’s ability to declare and pay distributions on its common units; |
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• | until May 1, 2015, the Partnership will not, and will not permit any subsidiary to, make any investments other than an investment not exceeding $0.25 million; and |
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• | on or before April 26, 2015, the Partnership shall furnish to BMO a cash flow forecast for the 13 week period subsequent to the date of delivery of such forecast. |
A copy of the Letter Agreement is filed as Exhibit 10.1 hereto and is incorporated herein by reference. The description of the Letter Agreement contained herein does not purport to be complete and is qualified in its entirety by reference to the full text of the Letter Agreement.
Relationships
BMO and its affiliates have, from time to time, performed, and may in the future perform, various financial advisory and commercial and investment banking services for the Partnership and its affiliates, for which they have received and in the future will receive customary compensation and expense reimbursement. BMO and its affiliates may, from time to time, engage in transactions with and perform services for the Partnership in the ordinary course of its business, for which they will receive fees and expenses. An affiliate of BMO is the sales agent of the Partnership’s At-the-Market Offering program pursuant to which such affiliate of BMO is entitled to customary commissions which they have received and in the future will receive.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information included under the heading “Letter Agreement” in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03 of this Current Report on Form 8-K.
Item 3.03 Material Modification to Rights of Security Holders.
The information included under the heading “Letter Agreement” in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.03 of this Current Report on Form 8-K.
Item 7.01 Regulation FD Disclosure
On April 10, 2015, in connection with the entry into the Letter Agreement described in Item 1.01 of this Current Report, the Partnership issued a press release. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed "furnished" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any filing under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
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10.1 | Letter Agreement, dated April 8, 2015, by and among New Source Energy Partners L.P., Bank of Montreal, as administrative agent, and the lenders party thereto. |
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99.1 | Press Release issued by New Source Energy Partners L.P., dated April 10, 2015. |
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 thereunto duly authorized.
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| | | New Source Energy Partners L.P. |
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| | By: | New Source Energy GP, LLC, its general partner |
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Dated: April 10, 2015 | | By: | /s/ Tom R. Russell |
| | Name: | Tom R. Russell |
| | Title: | Vice President, Senior Counsel and Corporate Secretary |
Exhibit Index
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Exhibit No. | | Description |
10.1 | | Letter Agreement, dated April 8, 2015, by and among New Source Energy Partners L.P., Bank of Montreal, as administrative agent, and the lenders party thereto. |
99.1 | | Press Release issued by New Source Energy Partners L.P., dated April 10, 2015. |
Execution Version
April 8, 2015
New Source Energy Partners L.P.
914 North Broadway Ave., Suite 230
Oklahoma City, Oklahoma 73102
Attention: Kristian Kos, President and Chief Executive Officer
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Re: | Credit Agreement, dated as of February 13, 2013, among New Source Energy Partners, L.P. (the “Borrower”), Bank of Montreal, as administrative agent (in such capacity, the “Administrative Agent”), and the lenders party thereto (the “Lenders”, and such agreement, as heretofore amended, restated, modified or supplemented, the “Credit Agreement”) |
Mr. Kos:
This letter relates to the Credit Agreement. Each capitalized term not defined herein shall have the meaning assigned such term in the Credit Agreement. All references to sections in this letter shall refer to sections of the Credit Agreement unless otherwise indicated.
Scheduled Borrowing Base Postponement
Pursuant to Section 12.02(b)(ii), the Borrower has requested that the Lenders postpone, and the Lenders do hereby postpone, the April 1, 2015 Scheduled Redetermination until May 1, 2015, such that the new Borrowing Base resulting from such redetermination (the “Postponed Scheduled Redetermination”) shall become effective and applicable to the Borrower, the Administrative Agent, the Issuing Bank and the Lenders on May 1, 2015 (or such later date pursuant to Section 2.07(d)) (May 1, 2015 or such later date, the “Postponed Scheduled Redetermination Date”). For the avoidance of doubt, the provisions of Section 2.07 shall apply to the Postponed Scheduled Redetermination, and for this purpose, the Administrative Agent shall propose the Proposed Borrowing Base on or before April 15, 2015.
As consideration for the agreement of the Lenders to postpone the April 1 Scheduled Redetermination, the Borrower covenants and agrees with the Lenders as follows:
a. During the period from and including the date hereof through and including the Postponed Scheduled Redetermination Date (the “Postponement Period”), the Borrower will not, and will not permit any Subsidiary to, declare or make any Restricted Payments pursuant to Section 9.04(iv), unless during the Postponement Period the Borrower has reduced the total Revolving Credit Exposures to an amount less than or equal to $55,000,000 and after giving effect to such Restricted Payment, the total Revolving Credit Exposures is an amount less than or equal to $55,000,0000 (and for the avoidance of any doubt, the provisions of Section 9.04(iv) shall otherwise apply);
b. During the Postponement Period, the Borrower will not, and will not permit any Subsidiary to, make any Investments pursuant to Sections 9.05(a)-(l) other than Investments in an aggregate amount not to exceed $250,000 pursuant to Section 9.05(m) (provided that the requirements of Section 9.05(m) are otherwise satisfied both before and after giving effect to each such Investment), unless during the Postponement Period the Borrower has reduced the total Revolving Credit Exposures to an amount less than or equal to $55,000,000 and after giving effect to such Investment, the total Revolving Credit Exposures is an amount less than or equal to $55,000,0000 (and for the avoidance of any doubt, the provisions of Section 9.05 shall otherwise apply); and
c. On or before April 26, 2015, the Borrower shall furnish to the Administrative Agent a cash flow forecast for the 13 week period subsequent to the date of delivery of such forecast to the Administrative Agent, such forecast to be in form and substance satisfactory to the Administrative Agent, unless the Borrower has reduced the total Revolving Credit Exposures to an amount less than or equal to $55,000,000 on or before April 26, 2015.
The failure of the Borrower to comply with any of the covenants contained in the foregoing clauses (a)-(c) shall constitute an immediate Event of Default.
Optional Reduction of Aggregate Maximum Credit Amounts
The Borrower hereby irrevocably requests that the Aggregate Maximum Credit Amounts be reduced, and effective immediately as of the date hereof, the Aggregate Maximum Credit Amounts is hereby irrevocably reduced, from $150,000,000 to $84,000,000. The Lenders do hereby waive the notice, timing and other requirements of Section 2.06(b) related to such request and reduction (provided that, for the avoidance of any doubt, such reduction shall be made ratably among the Lenders in accordance with each Lender’s Applicable Percentage).
The Borrower hereby expressly (a) acknowledges the terms of this letter, (b) ratifies and affirms its obligations under, and acknowledges, renews and extends its continued liability under, each Loan Document to which it is a party and agrees that each Loan Document to which it is a party remains in full force and effect, except as expressly modified hereby, notwithstanding the waiver contained in clause (a) above and (c) represents and warrants to the Lenders that as of the date hereof: (i) all of the representations and warranties contained in each Loan Document to which it is a party are true and correct in all material respects, except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties shall continue to be true and correct in all material respects as of such specified earlier date, (ii) no Default or Event of Default has occurred and is continuing and (iii) no event or events have occurred which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.
Except as expressly waived or modified herein, all covenants, obligations and agreements of the Borrower contained in the Credit Agreement and the other Loan Documents shall remain in full force and effect in accordance with their terms. Without limitation of the foregoing, the foregoing waiver of Section 2.06(b) is hereby granted to the extent and only to the extent specifically stated herein and for no other purpose and shall not be deemed to (a) be a consent or agreement to, or waiver or modification of, or amendment to, any other term or condition of the Credit Agreement, any other Loan Document or any of the documents referred to therein, (b) except as expressly set forth herein, prejudice any right or rights which the Administrative Agent or the Lenders may now have or may have in the future under or in connection with the Credit Agreement, any other Loan Document or any of the documents referred to therein, or (c) constitute any course of dealing or other basis for altering any obligation of the Borrower or any right, privilege or remedy of the Administrative Agent or the Lenders under the Credit Agreement, the other Loan Documents, or any other contract or instrument. Granting the waiver set forth herein does not and should not be construed to be an assurance or promise that consents or waivers will be granted in the future, whether for the matters herein stated or on other unrelated matters.
This letter (including, but not limited to, the validity and enforceability hereof) shall be governed by, and construed in accordance with, the laws of the State of Texas.
This letter may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of this letter by facsimile transmission or other electronic means shall be effective as delivery of a manually executed counterpart hereof.
This letter shall not become effective until the Administrative Agent receives counterparts of this letter executed by the Borrower and the Required Lenders.
This letter, the Credit Agreement and the other Loan Documents executed in connection herewith and therewith represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous, or unwritten oral agreements of the parties. There are no subsequent oral agreements among the parties.
[Signatures begin on next page.]
If the foregoing correctly states your understanding with respect to the matters stated in this letter, please acknowledge by signing in the space provided below.
Very truly yours,
BANK OF MONTREAL,
as Administrative Agent
By: /s/ Gumaro Tijerina
Gumaro Tijerina
Managing Director
Accepted and Agreed to as of the date first written above by:
BORROWER: NEW SOURCE ENERGY PARTNERS L.P.
By: New Source Energy GP, LLC,
its general partner
By: /s/ Kristian Kos
Kristian B. Kos
Chairman and Chief Executive Officer
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LENDERS: | BMO HARRIS FINANCING, INC., |
as a Lender
By: /s/ Gumaro Tijerina
Gumaro Tijerina
Managing Director
ASSOCIATED BANK, N.A.,
as a Lender
By: /s/ Farhan Iqbal
Farhan Iqbal
Senior Vice President
COMMONWEALTH BANK OF AUSTRALIA,
as a Lender
By: /s/ Jonathan Verlander
Jonathan E. Verlander
Head of Reserve Based Lending, Americas
SOCIETE GENERALE,
as a Lender
By: /s/ Max Sonnonstine
Max Sonnonstine
Director
CIT FINANCE LLC,
as a Lender
By: /s/ John Feeley
John Feeley
Director
FOR IMMEDIATE RELEASE
NEW SOURCE ENERGY PARTNERS ANNOUNCES CHANGE TO BORROWING BASE
OKLAHOMA CITY, OKLAHOMA, April 10, 2015 - New Source Energy Partners L.P., a Delaware limited partnership (NYSE: NSLP) (the “Partnership” or “New Source”), today announced that it has entered into an agreement with the Bank of Montreal, as administrative agent, and the other lenders that are parties to the credit agreement governing the Partnership’s revolving credit facility (the “Credit Agreement”) to postpone the April 1, 2015 scheduled semi-annual redetermination of the borrowing base until May 1, 2015. In addition, the borrowing base available under the revolving credit facility was reduced, effective April 8, 2015, from $90 million to $84 million, which was the amount of borrowings outstanding as of April 8, 2015. The agreement further provides that, prior to the borrowing base redetermination on May 1, 2015, the Partnership will not declare or make any distributions on its common units until the total outstanding borrowings under the revolving credit facility is at or below $55 million.
“We have previously stated that we believe the borrowing base under the Partnership’s credit facility would be reduced by $20 million to $30 million,” said Kristian Kos, Chairman and Chief Executive Officer. “The lenders are currently finalizing their review in order to determine the updated borrowing base. However, we believe the $20 million to $30 million range is still accurate. The agreement with BMO postpones the redetermination by one month, which allows the Partnership more time to secure financing opportunities currently under review.”
About New Source Energy Partners L.P.
New Source Energy Partners L.P. is an independent energy partnership engaged in the production of its onshore oil and natural gas properties that extends across conventional resource reservoirs in east-central Oklahoma and in oilfield services that specialize in increasing efficiencies and safety in drilling and completion processes. For more information on the Partnership, please visit www.newsource.com.
Forward-Looking Statements
This news release contains “forward-looking statements” within the meaning of federal securities laws. These statements express a belief, expectation or intention and are generally accompanied by words that convey projected future events or outcomes. We have based these forward-looking statements on our current expectation and assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks and uncertainties, many of which are beyond our control. For a full discussion of these risks and uncertainties, please refer to the “Risk Factors” section of the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2014 and the information included in the Partnership’s quarterly and current reports and other public filings. These forward-looking statements are based on and include the Partnership’s expectations as of the date hereof. We undertake no obligation to update or revise any forward-looking statements except as may be required by applicable law.
New Source Energy Partners L.P. - Investor & Media Contact
Nick Hodapp
Director - Investor Relations
(405) 272-3028
nhodapp@newsource.com
New Source Energy Partners (CE) (USOTC:NSLPQ)
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