DENVER, Feb. 2 /PRNewswire-FirstCall/ -- Gasco Energy (NYSE Amex: GSX) today announced an amendment to its Credit Agreement led by JPMorgan.
Amended Credit Agreement
On February 1, 2010 Gasco entered into the Ninth Amendment to the Company's Credit Agreement with the lenders (the "Lenders") thereunder pursuant to which the Credit Agreement was amended, among other things, to no longer require special redeterminations of the Company's borrowing base. Borrowing base redeterminations will now revert to the regular redetermination schedule of every six months on or about May 1 and November 1 each year. Additionally, the interest rate margin (as more fully described below) was increased by 0.25% effective February 1, 2010.
Furthermore, the Ninth Amendment includes a reduction of the Company's borrowing base to $16 million from $35 million to be effective April 1, 2010. The Company anticipates using a portion of the expected $23 million in gross cash proceeds from its recently announced asset sales (expected to close in the first quarter of 2010) to repay the outstanding loans in an amount sufficient to conform to the reduced borrowing base. As of January 31, 2010, the Company had cash on hand of approximately $11 million and had outstanding borrowings under its credit facility of approximately $35 million.Interest on borrowings under the Amended Credit Agreement accrues at variable interest rates at either, at Gasco's election, a Eurodollar rate or an alternate base rate. The Eurodollar rate is calculated as LIBOR plus an applicable margin that varies from 2.75% (for periods in which the Company has utilized less than 50% of the borrowing base) to 3.75% (for periods in which the Company has utilized greater than 90% of the borrowing base). The alternate base rate is calculated as (1) the greater of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus 2.00% or (c) the Adjusted LIBO Rate for a one month interest period on such day plus 1%, plus (2) an applicable margin that varies from 1.75% (for periods in which the Company has utilized less than 50% of the borrowing base) to 2.75% (for periods in which the Company has utilized greater than 90% of the borrowing base). Gasco elects the basis of the interest rate at the time of each borrowing; however, under certain circumstances, Gasco's lender may require it to use the non-elected basis in the event the elected basis does not adequately and fairly reflect the cost of making such loans. In addition, Gasco is obligated to pay a commitment fee of 0.50% under the Credit Agreement quarterly in arrears based on a percentage multiplied by the daily amount that the aggregate commitments exceed borrowings under the agreement.