8-KMaterial AgreementsFinancial EventsExhibits & Filings

DEVON ENERGY CORP/DE 8-K Report, Material Agreement (Dec 20, 2013)

Filed December 20, 2013For Securities:DVN

Summary

Devon Energy Corporation (DVN) filed an 8-K on December 20, 2013, to disclose the execution of a new $2.0 billion senior unsecured term loan facility. This facility is specifically earmarked for the consummation of the acquisition of certain subsidiaries of GeoSouthern Energy Corporation. The facility is divided into two tranches: a $1 billion 3-year loan and a $1 billion 5-year loan. The funding of these term loans is contingent upon the successful closing of the GeoSouthern Acquisition. Should the acquisition not proceed, the credit facility will be terminated. This move signals a significant strategic step for Devon Energy, indicating a substantial commitment to expanding its asset base through this acquisition, financed by this new debt facility. Investors should monitor the progress and outcome of the GeoSouthern Acquisition closely.

Key Highlights

  • 1Devon Energy entered into a $2.0 billion senior unsecured term loan credit facility on December 16, 2013.
  • 2The credit facility is comprised of two tranches: a $1 billion 3-year loan and a $1 billion 5-year loan.
  • 3Proceeds from the credit facility are exclusively for the acquisition of certain subsidiaries of GeoSouthern Energy Corporation.
  • 4The credit facility will be terminated if the GeoSouthern Acquisition does not close.
  • 5Interest rates are variable, based on the Company's credit ratings.
  • 6The 5-year loan has a staggered amortization schedule beginning after the third anniversary of funding.
  • 7The agreement includes customary covenants, such as maintaining a consolidated funded indebtedness to consolidated total capitalization ratio of no greater than 65%.

Frequently Asked Questions

The primary purpose of the $2.0 billion credit facility is to finance the acquisition of certain subsidiaries of GeoSouthern Energy Corporation. The funds can only be used for this specific transaction.

If the GeoSouthern Acquisition does not close, the entire $2.0 billion credit facility will be terminated. Funding of the loans is conditional on the successful consummation of the acquisition.

Interest rates will be determined by a pricing grid based on Devon Energy's credit ratings. The 3-year loan does not have scheduled amortization. The 5-year loan begins amortization at 5.0% quarterly after the third anniversary of funding, increasing to 12.5% quarterly after the fourth anniversary.

Yes, the credit agreement includes customary covenants. Notably, Devon Energy must maintain a ratio of consolidated funded indebtedness to consolidated total capitalization of no greater than 65% at the end of each fiscal quarter.