UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
___________
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
report (Date of earliest event reported): December 27,
2007
Storm
Cat Energy Corporation
(Exact
Name of Registrant as Specified in Charter)
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British
Columbia, Canada
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001-32628
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06-1762942
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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1125
17th Street,
Suite 2310, Denver, Colorado 80202
(Address
of Principal Executive Offices) (Zip Code)
Registrant’s
telephone number, including area code:
(303) 991-5070
N/A
(Former
Name or Former Address, if Changed Since Last Report)
Check
the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation
of
the registrant under any of the following provisions (see General Instruction
A.2. below):
£ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
£ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
£ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
£ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01. Entry
into a Material Definitive Agreement.
On
December 27, 2007, Storm Cat Energy
(USA) Corporation (“Storm Cat (USA)”), a wholly owned subsidiary of Storm Cat
Energy Corporation (“Storm Cat”), entered into a Credit Agreement (the "Credit
Agreement"), with Wells Fargo Foothill, LLC, as Agent, and the Lenders party
thereto (the “Credit Facility”). Additionally, Storm Cat entered into
a Guaranty to guarantee the obligations of Storm Cat (USA) under the Credit
Facility. The Credit Facility consists of a term loan facility in an
aggregate principal amount of $30,000,000 and a revolving credit facility
in an
aggregate principal amount of $50,000,000. The borrowing base for the
revolving credit facility was initially set at $25,000,000. The
Credit Agreement provides for a semi-annual evaluation of such amount,
determined based on Storm Cat’s oil and natural gas reserves.
The
Credit Facility will mature on
September 27, 2011 or December 27, 2012 in the event Storm Cat's Series A
Subordinated Convertible Notes due March 31, 2012 ("Series A Notes") and
Series
B Subordinated Convertible Notes due March 31, 2012 (together with Series
A
Notes, the "Convertible Notes") are entirely converted into equity, with
no
remaining cash payment obligations or are refinanced with a maturity date
not
earlier than June 27, 2013.
Storm
Cat borrowed $43,000,000 at the
time of execution of the Credit Agreement, consisting of $30,000,000 in term
loans and $13,000,000 from the revolving credit facility. The Credit
Facility is available to provide funds for general corporate purposes, including
funding of capital expenditures and working capital.
Each
loan under the Credit Facility
bears interest at a base rate or Eurodollar rate, as requested by Storm Cat,
plus an applicable percentage based on Storm Cat's usage of the
facility. The applicable margin above the base rate and the
Eurodollar rate for the term loan is 5.75% and 7.00%,
respectively. The applicable margin above the base rate and the
Eurodollar rate for the revolving credit facility ranges from 0.75% to 1.25%
and
2.00% and 2.50%, respectively, in each case depending on Storm Cat’s usage under
the borrowing base. Interest on funds drawn will be paid monthly,
except interest on loans based on the Eurodollar rate will be payable
at the end of each interest period of 1, 2, 3 or 6 months, and, in any event,
at
least every 3 months.
The
Credit Facility contains
affirmative and negative covenants (including limitations on indebtedness,
liens, investments, loans and advances, dividends, distributions and redemptions
of Storm Cat's stock, sales or other dispositions of assets, nature of business,
hedging agreements, mergers, use of proceeds of loans and letters of credit,
environmental matters, transactions with affiliates, subsidiaries, and negative
pledge agreements, in each case subject to carveouts and/or baskets mutually
agreed upon by the parties) that are customary for a facility of this nature.
The Credit Facility also contains customary representations and warranties
(including those relating to corporate existence, financial condition,
litigation, absence of defaults, authority and enforceability, approvals,
use of
proceeds and letters of credit, ERISA, taxes, title to property, no material
misstatements, Investment Company Act status, subsidiaries, location of business
and offices, environmental matters, compliance with laws, insurance, material
agreements, and solvency) and customary events of default (including those
relating to monetary defaults, covenant defaults, cross defaults and bankruptcy
events). The Credit Facility contains five financial
covenants:
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(1)
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Minimum
quarterly EDITDA (as defined in the Credit Agreement) of $12,750,000
for
the quarter ending March 31, 2008, $16,600,000 for the quarter
ending June
30, 2008, $20,400,000 for the quarter ending September 30, 2008,
$23,300,000 for the quarter ending December 31, 2008,
$28,300,000 for the quarter ending March 31, 2009, $32,300,000
for the
quarter ending June 30, 2009, and $37,300,000 for the quarter ending
September 30, 2009 and for each quarter ending
thereafter;
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(2)
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Minimum
average daily production for any quarterly period of 16,800 for
the
quarter ending March 31, 2008, 23,100 for the quarter ending June
30,
2008, 28,500 for the quarter ending September 30, 2008, 30,200
for the
quarter ending December 31, 2008, 29,400 for the quarter ending
March 31, 2009, 34,600 for the quarter ending June 30, 2009, and
40,600
for the quarter ending September 30, 2009 and for each quarter
ending
thereafter;
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(3)
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Minimum
Asset Coverage Ratio (based on a discounted net present value of
"Proved
Reserves"), calculated each quarter, of
1.60:1.00;
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(4)
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Minimum
Interest Coverage Ratio (based on EBIDTA and interest expense excluding
interest expense associated with the Convertible Notes) of 2.50:1.00
for
the quarter ending March 31, 2008, 2.75:1.00 for the quarter ending
June
30, 2008, 3.00:1.00 for the quarter ending September 30, 2008,
3.25:1.00
for the quarter ending December 31, 2008 and 3.50:1.00 for the
quarter ending March 31, 2009 and for each quarter ending thereafter;
and
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(5)
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Minimum
Leverage Ratio of 4.30:1.00 for the quarter ending March 31, 2008,
3.30:1.00 for the quarter ending June 30, 2008, 2.70:1.00 for the
quarter
ending September 30, 2008, 2.50:1.00 for the quarter
ending December 31, 2008 and for each quarter ending
thereafter.
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For
purposes of calculating the foregoing covenants, EBITDA shall be calculated
as
follows for the first three fiscal quarters following the Closing Date:
(a) for
the quarter ending March 31, 2008, EBITDA shall be EBITDA for the three-month
period ending on such date multiplied by four; (b) for the quarter ending
June
30, 2008, EBITDA shall be EBITDA for the six-month period ending on such
date
multiplied by two; (c) for the quarter ending September 30, 2008, EBITDA
shall
be EBITDA for the nine-month period ending on such date multiplied by 4/3;
and
thereafter, EBITDA shall be calculated using EBITDA for the period of four
(4)
quarters ending on the last day of the quarter immediately preceeding the
date
of determination for which financial statements are
available.
Storm
Cat and the subsidiary guarantors
have also executed and delivered certain other related agreements and documents
pursuant to the Credit Facility, including a guaranty agreement, security
and
pledge agreement and mortgages. The obligations of Storm Cat, Storm
Cat (USA), and their subsidiaries under the Credit Facility are secured by
a
first priority security interest in favor of the Agent for the benefit of
the
lenders, in Storm Cat’s, Storm Cat (USA)'s and the subsidiaries’ material
tangible and intangible assets, and proved reserves, among other
things.
On
December 28, 2007, Storm Cat
announced the closing of its new Credit Facility in a news release that is
filed
as Exhibit 99.1 to this Current Report on Form 8−K and incorporated herein by
reference.
The
foregoing is qualified in its
entirety by reference to the Credit Agreement, a conformed copy of which
is
attached hereto as Exhibit 4.1 and incorporated herein by
reference.
Item
2.03.
Creation
of a Direct Financial Obligation or on Obligation under an Off-Balance
Sheet
Arrangement of a Registrant.
The
information set forth above under Item 1.01 of this Current Report on Form
8-K
is incorporated herein by reference.
Item
9.01. Financial
Statements and Exhibits.
(d) Exhibits.
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Exhibit
No.
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Description
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4.1
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Credit
Agreement, dated as of December 27, 2007, by and among Storm Cat
Energy
(USA) Corporation, the Lenders Party Hereto and Wells Fargo Foothill,
LLC,
as Agent
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99.1
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P
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News
Release, dated December 28, 2007
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SIGNATURES
Pursuant
to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report
to
be signed on its behalf by the undersigned hereunto duly
authorized.
| STORM CAT ENERGY CORPORATION | |||
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Date: December
28,
2007
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By:
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/s/ Paul Wiesner | |
| Paul Wiesner | |||
| Chief Financial Officer | |||
Exhibit
Index
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Exhibit
No.
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Description
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4.1
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Credit
Agreement, dated as of December 27, 2007, by and among Storm Cat
Energy
(USA) Corporation, the Lenders Party Hereto and Wells Fargo Foothill,
LLC,
as Agent
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99.1
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P
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News
Release, dated December 28, 2007
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