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Debt
12 Months Ended
Dec. 31, 2017
Debt Disclosure [Abstract]  
Debt

7. DEBT

 

Energy One, a wholly-owned subsidiary the Company, has a Credit Facility with APEG Energy II, L.P. (“APEG”). As of December 31, 2017 and 2016, outstanding borrowings under the Credit Facility amounted to $1.5 million and $6.0 million, respectively. On May 2, 2017 the Amended and Restated Credit Agreement was sold, assigned and transferred between Wells Fargo Bank N.A. to APEG. U.S. Energy Corp., Energy One and APEG entered into a Limited Forbearance Agreement dated May 2, 2017. On June 28, 2017, U.S. Energy Corp., Energy One and APEG entered into a Fifth Amendment to the Credit Facility providing for, among other things, an extension of the maturity date to July 30, 2019, new financial coverage ratio covenants and a waiver with respect to any historical Company non-compliance with any and all financial covenants. As of December 31, 2017 and 2016, the borrowing base was $6.0 million. Borrowings under the Credit Facility are secured by Energy One’s oil and gas producing properties and substantially all of the Company’s cash and equivalents. Each borrowing under the agreement has a term of six months, but can be continued at the Company’s election through July 2019 if the Company remains in compliance with the covenants under the Credit Facility. The interest rate on the Credit Facility is currently fixed at 8.75%.

 

Energy One is required to comply with customary affirmative covenants and with certain negative covenants. The principal negative financial covenants do not permit (as the following terms are defined in the Fifth Amendment) (i) Proved Developed Producing Coverage Ratio to be less than 1.2 to 1; and (ii) the current ratio to be less than 1.0 to 1.0. As of December 31, 2017, the Company is in compliance with all Credit Facility covenants. Additionally, the Credit Agreement prohibits or limits Energy One’s ability to incur additional debt, pay cash dividends and other restricted payments, sell assets, enter into transactions with affiliates, and to merge or consolidate with another company. The Company is a guarantor of Energy One’s obligations under the Credit Agreement.

 

On December 27, 2017, U.S. Energy Corp. received shareholder approval for the exchange agreement (“Exchange Agreement”) by and among the Company, the Company’s wholly owned subsidiary Energy One LLC and APEG Energy II, L.P., (“APEG”), an entity controlled by Angelus Private Equity Group, LLC pursuant to which, on the terms and subject to the conditions of the Exchange Agreement, APEG exchanged $4,463,380 of outstanding borrowings under the Company’s Credit Facility, for 5,819,270 new shares of common stock of the Company, par value $0.01 per share, representing an exchange price of $0.767 representing a 1.3% premium over the 30-day volume weighted average price of the Company’s common stock on September 20, 2017 (the “Exchange Shares”). Accrued, unpaid interest on the Credit Facility held by APEG was paid in cash at the closing of the transaction. Following the close of the transaction, APEG holds approximately 49.3% of the outstanding Common Stock of U.S. Energy. The Transaction was approved by the Company’s shareholders and closed in the fourth quarter of 2017. Additionally, the transaction was recorded based on a $1.53 stock price which represented the Company’s stock price on the date of shareholder approval.