Trans Energy Inc. (OTCQB: TENG), a pure play Marcellus Shale exploration and production company, reports that its subsidiary, American Shale Development Inc. (ASD), has closed on a new credit facility with Morgan Stanley Capital Group Inc. in the amount of $200 million. The facility closed and an initial amount of $102.5 million was funded on May 21.
The credit facility is in the amount of $200 million, of which $102.5 million was funded at closing to refinance ASD's existing debt and to pay certain fees and expenses in connection with the financing. An additional $47.5 million has been committed and is available to fund growth expenditures during the next two years, based on a formula that makes further availability contingent upon the value of ASD's producing properties as compared to its net debt. An additional $50 million may be made available at Morgan Stanley's discretion.
The facility carries an initial interest rate of 10%, which can be reduced upon achieving certain collateral increases, and it matures on Dec. 31, 2018. ASD also granted Morgan Stanley a net profits interest (NPI) in its oil and gas assets, with an initial NPI of 6.5% granted at the closing and a contingent NPI of 2.5% that will be earned pro rata as ASD draws on the $47.5 million contingent commitment. If prepaid prior to the third anniversary of the closing, certain prepayment penalties may apply.
Durham Capital Corp. acted as the company's financial advisor in connection with the new credit facility.