Business Context and Reporting Period
This filing is a First Amending Agreement to the Credit Agreement for Baytex Energy Ltd. (the "Borrower"), dated June 4, 2008. The agreement involves the Borrower, a syndicate of Lenders, and The Toronto-Dominion Bank as Agent. The primary purpose of this amendment is to increase credit facilities, extend maturity dates, and add a new lender (Canadian Imperial Bank of Commerce) to support the Borrower's operations and an ongoing acquisition of Burmis Energy Inc.
Key Financial Metrics and Debt Structure
- Syndicated Facility: Increased from Cdn.$350,000,000 to Cdn.$460,000,000.
- Operating Facility: Increased from Cdn.$20,000,000 to Cdn.$25,000,000.
- Total Commitments: Cdn.$485,000,000 (Cdn.$460M Syndicated + Cdn.$25M Operating).
- Borrowing Base: Determined to be Cdn.$485,000,000 as of the agreement date.
- Maturity Dates: Both the Syndicated Facility and Operating Facility maturity dates are extended to July 1, 2009.
- Revenue, Profit, and Cash Flow: The filing text does not provide specific values for revenue, profit, cash flow, or margins.
Material Changes Versus Prior Period
- Facility Expansion: The Syndicated Facility capacity increased by Cdn.$110,000,000, and the Operating Facility increased by Cdn.$5,000,000.
- New Lender Participation: Canadian Imperial Bank of Commerce joined the syndicate as a new Lender.
- Acquisition Support: The amendments are conditioned upon the completion of the acquisition of Burmis Energy Inc. (the "Acquisition"), including the amalgamation of Burmis Energy Inc. with the Borrower.
- Covenant Updates: Section 10.2(j) regarding mergers and amalgamations was revised to explicitly address the Acquisition and successor obligations.
Guidance, Risks, and Contingencies
- Conditions Precedent: The effectiveness of this agreement is contingent upon several conditions, including the payment of fees, execution of guarantees by Material Subsidiaries, and the successful completion of the Burmis Energy acquisition without material adverse changes.
- Security Interests: The Borrower must ensure assets are free of security interests other than permitted encumbrances following the acquisition.
- Outstanding Instruments: Specific provisions address the treatment of outstanding Libor Loans and Bankers' Acceptances, noting that new lenders do not assume risk for these instruments until they mature and are rolled over.
- Fees: The Borrower agreed to pay fees on both the increase in commitments and existing commitments; specific fee percentages are redacted in the text.
Investor Verification Checklist
- Verify the completion status of the Burmis Energy Inc. acquisition and amalgamation.
- Confirm the specific fee percentages payable to lenders for the increased and existing commitments (currently redacted).
- Review the updated Schedule A to determine the specific commitment allocation for each lender, particularly the new lender (CIBC).
- Assess the impact of the extended maturity date (July 1, 2009) on the company's liquidity planning.
- Confirm that no Event of Default exists following the acquisition and that all governmental authorizations for the transaction have been obtained.