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
January
16, 2009
Date of
Report (Date of earliest event reported)
ABRAXAS
PETROLEUM CORPORATION
(Exact
name of registrant as specified in its charter)
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Nevada
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1-16071
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74-2584033
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(I.R.S.
Employer Identification Number)
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18803 Meisner
Drive
San Antonio,
Texas 78258
(210)
490-4788
(Address
of principal executive offices and Registrant’s telephone number, including area
code)
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 (see General Instruction A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01 Entry into a Material
Definitive Agreement
Amendment
to Amended and Restated Credit Agreement
On
January 16, 2009, Abraxas Energy Partners, L.P., an indirect subsidiary of
Abraxas Petroleum Corporation, which we refer to as the Partnership, entered
into an amendment to its amended and restated senior secured revolving credit
facility with Société Générale, as administrative agent and issuing lender, The
Royal Bank of Canada, as syndication agent, The Royal Bank of Scotland PLC, as
documentation agent and the lenders signatory thereto, which we refer to as the
Partnership Credit Facility. Under the terms of the amendment, during
the period beginning on January 16, 2009 and ending on the date that the
Subordinated Credit Agreement (as defined below) is terminated, outstanding
amounts under the Partnership Credit Facility bear interest at (a) the
greater of (1) the reference rate announced from time to time by Société
Générale, (2) the Federal Funds Rate plus 0.5%, and (3) a rate determined
by Société Générale as the daily one-month LIBOR rate plus, in each case,
(b) 1.5% - 2.5%, depending on the utilization of the borrowing base, or, if
the Partnership elects, at the London Interbank Offered Rate plus 2.5% - 3.5%
depending on the utilization of the borrowing base. After the
termination of the Subordinated Credit Agreement, outstanding amounts under the
Partnership Credit Facility will bear interest at (a) the greater of
(1) the reference rate announced from time to time by Société Générale,
(2) the Federal Funds Rate plus 0.5%, and (3) a rate determined by Société
Générale as the daily one-month LIBOR rate plus, in each case, (b) 1.0% -
2.0%, depending on the utilization of the borrowing base, or, if the Partnership
elects, at the London Interbank Offered Rate plus 2.0% - 3.0% depending on the
utilization of the borrowing base. At January 16, 2009, the interest
rate on the Partnership Credit Facility was 3.8%.
Under the
terms of the amendment, the Partnership may make cash distributions if, after
giving effect to such distributions, the Partnership is not in default under the
Partnership Credit Facility, there is no borrowing base deficiency and provided
that:
(i) no
such distribution shall be made using proceeds of any advance unless the unused
portion of the amount then available under the Partnership Credit Facility is
greater than or equal to 10% of the lesser of the borrowing base (which at
January 16, 2009 was $140.0 million) or the total commitment amount of the
Partnership Credit Facility (which is $300.0 million) at such time;
(ii) with
respect to the cash distribution scheduled to be made on or about May 15, 2009
attributable to the first quarter of 2009, no distribution may be made unless
(x) the sum of the Partnership’s unrestricted cash and the unused portion of the
amount then available under the Partnership Credit Facility after giving effect
to such distribution is at least $20.0 million or (y) the Subordinated Credit
Agreement shall have terminated; and
(iii) no
such distribution may exceed $0.44 per unit per quarter while the Subordinated
Credit Agreement is outstanding.
In
addition, under the terms of the amendment, the Partnership’s capital
expenditures may not exceed $12.5 million prior to the termination of the
Subordinated Credit Agreement.
Amendment
to Subordinated Credit Agreement
On
January 16, 2009, the Partnership entered into an amendment to its
subordinated credit facility with Société Générale, as administrative agent, The
Royal Bank of Canada, as syndication agent, and the lenders signatory thereto,
which we refer to as the Subordinated Credit Agreement. Under the
terms of the amendment to the Subordinated Credit Agreement, outstanding amounts
bear interest at (a) the greater of (1) the reference rate announced
from time to time by Société Générale, (2) the Federal Funds Rate plus
0.5%, and (3) a rate determined by Société Générale as the daily one-month LIBOR
rate plus, in each case, (b) 7.5%, or, if the Partnership elects, at the
greater of (a) 2.0% and (b) the London Interbank Offered Rate plus, in each
case, 8.5%. At January 16, 2009, the interest rate on the
Subordinated Credit Agreement was 10.5%. The amended maturity date is
July 1, 2009. Principal payments under the Subordinated Credit
Agreement must be made on May 14, 2009 in an amount, which we refer to as the
May 14, 2009 Payment Amount, equal to the lesser of the amount of cash
distributed to Abraxas Energy Investments, LLC, a wholly-owned subsidiary of
Abraxas Petroleum, on or about February 14, 2009 and $2.25 million with the
balance due on the maturity date. The maturity date may be
accelerated if any limited partner of the Partnership, other than Perlman Value
Partners, exercises its right to convert its limited partner units into shares
of common stock of Abraxas Petroleum pursuant to the terms of the Exchange and
Registration Rights Agreement dated May 25, 2007, as amended (the “Exchange
Agreement”), among Abraxas Petroleum, the Partnership and the purchasers named
therein pursuant to which, among other things, Abraxas Petroleum and the
Partnership agreed to allow the purchasers to exchange their limited partner
units in the Partnership for shares of Abraxas Petroleum common
stock. As a result of the amendment to the Subordinated Credit
Agreement, the date on which the purchasers, if the Partnership’s IPO has not
been consummated prior to that date, may first exchange their Partnership units
for Abraxas Petroleum common stock is April 30, 2009. The amendment added two
events of default to the Subordinated Credit Agreement. The first
event of default would occur if the Partnership fails to receive a letter of
credit, which we refer to as the APC L/C, in its favor from Abraxas Petroleum
equal to the May 14, 2009 Payment Amount, the Partnership fails to draw on the
APC L/C on or before May 14, 2009 or the Partnership fails to use the proceeds
of the APC L/C to make the principal payment due on May 14,
2009. This event of default would not occur in the event that the
Partnership repays the principal amount due on May 14, 2009 with funds received
from Abraxas Petroleum. The Partnership and Abraxas Petroleum have
agreed that upon the occurrence of such a payment or the Partnership’s drawing
on the APC L/C that, in consideration thereof, the Partnership would issue a
number of additional units to Abraxas Petroleum determined by dividing the May
14, 2009 Payment Amount by 110% of the average trading yields of comparable
E&P MLPs based on the closing market price on May 14, 2009 multiplied by the
most recent quarterly distribution paid or declared by the Partnership times
four. The other event of default would occur if the Partnership fails
to receive $20.0 million of proceeds from an equity issuance on or before April
30, 2009.
The
summaries of the amendments to the Partnership Credit Facility and the
Subordinated Credit Agreement under this Item 1.01 are qualified in their
entirety by the copies thereof filed as Exhibits 10.1 and 10.2, respectively, to
this Form 8-K, which are incorporated in this Item 1.01 by
reference.
Item
9.01 Financial Statements and
Exhibits.
(c) Exhibits.
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Exhibit
10.1
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Amendment
No. 1 to Amended and Restated Credit Agreement dated January 16, 2009, by
and among Abraxas Energy Partners, L.P., Société Générale, as
administrative agent and issuing lender, The Royal Bank of Canada, as
syndication agent, The Royal Bank of Scotland PLC, as documentation agent,
and the lenders signatory thereto.
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Exhibit
10.2
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Amendment
No. 1 to Subordinated Credit Agreement dated January 16, 2009 by and among
Abraxas Energy Partners, L.P., Société Générale, as administrative agent,
The Royal Bank of Canada, as syndication agent, and the lenders signatory
thereto.
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Exhibit
99.1
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Press
Release dated January 20, 2009.
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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.
ABRAXAS
PETROLEUM CORPORATION
By: /s/
Chris E.
Williford
Chris E.
Williford
Executive
Vice President, Chief Financial
Officer
and Treasurer
Dated: January
20, 2009