EP Energy Corp - 10-Q filing on 2015-04-30

Long-Term Debt

3 Months Ended

Mar. 31, 2015

Listed below are our debt obligations as of the periods presented:



	Interest Rate	March 31, 2015		December 31, 2014
		(in millions)
$2.75 billion RBL credit facility - due May 24, 2019	Variable	$	980	$	852
$750 million senior secured term loan - due May 24, 2018⁽¹⁾⁽³⁾	Variable	496		496
$400 million senior secured term loan - due April 30, 2019⁽²⁾⁽³⁾	Variable	150		150
$750 million senior secured notes - due May 1, 2019⁽³⁾	6.875%	750		750
$2.0 billion senior unsecured notes - due May 1, 2020	9.375%	2,000		2,000
$350 million senior unsecured notes - due September 1, 2022	7.75%	350		350
Total		$	4,726	$	4,598

(1) The term loan was issued at 99% of par and carries interest at a specified margin over the LIBOR of 2.75%, with a minimum LIBOR floor of 0.75%. As of March 31, 2015 and December 31, 2014, the effective interest rate of the term loan was 3.50%.

(2) The term loan carries interest at a specified margin over the LIBOR of 3.50%, with a minimum LIBOR floor of 1.00%. As of March 31, 2015 and December 31, 2014, the effective rate for the term loan was 4.50%.

(3) The term loans and secured notes are secured by a second priority lien on all of the collateral securing the RBL credit facility, and effectively rank junior to any existing and future first lien secured indebtedness of the Company.

As of March 31, 2015 and December 31, 2014, we had $85 million and $90 million, respectively, in deferred financing costs on our consolidated balance sheets. During each of the quarters ended March 31, 2015 and 2014, we amortized $5 million of deferred financing costs in interest expense.

During the first quarter of 2014, we repaid and retired our senior PIK toggle note with a portion of the proceeds from our initial public offering, recording a $17 million loss on extinguishment of debt.

$2.75 Billion Reserve-based Loan (RBL). We have a $2.75 billion credit facility in place which allows us to borrow funds or issue letters of credit (LC's). As of March 31, 2015, we had $980 million of outstanding borrowings and approximately $82 million of LC's issued under the facility, leaving $1.7 billion of remaining capacity available.

The RBL Facility is collateralized by certain of our oil and natural gas properties and has a borrowing base subject to semi-annual redetermination. In April 2015, we completed our semi-annual redetermination, reaffirming the borrowing base at $2.75 billion and extending the maturity date to May 2019, provided that the 2018 and 2019 secured term loans and senior notes are retired or refinanced six months prior to maturity. Downward revisions of our oil and natural gas reserves due to future declines in commodity prices, performance revisions, sales of assets or the incurrence of certain types of additional debt, among other items, could cause a redetermination of the borrowing base and could negatively impact our ability to borrow funds under the RBL Facility in the future.

Restrictive Provisions/Covenants. The availability of borrowings under our credit agreements and our ability to incur additional indebtedness is subject to various financial and non-financial covenants and restrictions. There have been no significant changes to our restrictive covenants, and as of March 31, 2015, we were in compliance with all of our debt covenants. For a further discussion of our debt agreements and restrictive covenants, see our 2014 Annual Report on Form 10-K.