Canadian firm helps Exco Resources restructure debt

Dec. 1, 2015
Exco Resources Inc. of Dallas announced a series of transactions intended to increase its financial flexibility as it continues to reduce net debt, including an agreement with subsidiaries of Fairfax Financial Holdings Ltd. to provide a $300 million in a second-lien loan.

Exco Resources Inc. of Dallas announced a series of transactions intended to increase its financial flexibility as it continues to reduce net debt, including an agreement with subsidiaries of Fairfax Financial Holdings Ltd. to provide a $300 million in a second-lien loan.

An independent producer, Exco has assets in Haynesville, Bossier, Marcellus and Eagle Ford shale plays. Fairfax Financial is owned by Canadian financier Prem Watsa.

Exco also announced that certain unsecured noteholders agreed to become lenders under a new $291 million senior secured second-lien term loan in exchange for Exco repurchasing $577 million of senior unsecured notes at an average price of 51% of principal amount.

The recent debt-reduction transactions were expected to close on Oct. 26, subject to the satisfaction or waiver of customary closing conditions. Including all the recent steps taken, Exco said it was reducing net debt by $270 million, or 18%.

Harold L. Hickey, Exco's chief executive officer and president, said Fairfax was one of the company's largest shareholders.

"We believe this financing provides Exco the opportunity to strengthen the company by investing this capital in hard assets, while still maintaining $234 million of secured debt capacity for future exchanges or issuance of new secured debt," Hickey said. "We also believe these transactions represent an important step as the company delivers on its long-term, disciplined performance improvement plan."

In September, C. John Wilder became Exco executive chairman. Wilder led turnarounds at Entergy Corp. and TXU Corp., both power companies.