Clayton Williams closes $350M term loan funding

Clayton Williams Energy Inc. (NYSE:CWEI) has closed its term loan transaction with funds managed by Ares Management LP (NYSE: ARES). Aggregate cash proceeds from the transaction of $340 million, net of transaction costs, were used to fully repay the company’s outstanding indebtedness under its revolving credit facility of $160 million, plus accrued interest and fees, and added $180 million of cash to the company’s balance sheet to provide additional liquidity to fund its operations and future development.

Upon closing of this transaction, Clayton Williams issued term loans to Ares in the principal amount of $350 million, net of original issue discount of $16.8 million, for cash proceeds of $333.2 million. Concurrently, the company issued warrants to purchase 2.25 million shares of its common stock at a price of $22 per share to Ares for cash proceeds equal to the original issue discount from the issuance on the loans. The warrants represent 18.5% of the company’s currently outstanding shares of common stock, or 15.6% of its common shares on an as-converted basis.

In connection with the issuance of the warrants, Clayton Williams designated and issued to the initial warrant holders 3,500 shares of special voting preferred stock, $0.10 par value per share, granting them the right to elect two members of the company’s board of directors.

Upon closing of this transaction and the repayment of all outstanding indebtedness on the company’s existing revolving credit facility, the facility was amended to reduce aggregate lender commitments from $450 million to $100 million and to ease financial covenants, among other changes.

Goldman Sachs served as sole arranger and bookrunner, and Stephens Inc. advised Ares. Vinson & Elkins LLP served as legal advisor to Clayton Williams, and Kirkland & Ellis LLP served as legal advisor to Ares.

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