Long-Term Debt

The following long-term debt obligations were outstanding as of December 31, 2018 and 2017:



	December 31,
In thousands	2018			2017
Senior Secured Credit Facility	$	183,000		$	142,080
8.75% Senior Notes due 2019	—			151,848
11.25% Senior Notes due 2023	250,000			—
Mortgage debt	9,151			7,891
Other	275			759
Total long-term debt	442,426			302,578
Unamortized discount	(4,500		)	(949		)
Unamortized debt issuance costs	(1,044		)	(474		)
Total long-term debt net of discount and debt issuance costs	$	436,882		$	301,155

Senior Secured Credit Facility

On July 28, 2015, Lonestar closed a Credit Agreement for a $500 million Senior Secured Credit Facility with Citibank, N.A., as administrative agent, and other lenders party thereto (as amended, supplemented or modified from time to time, the “Credit Facility”). The Credit Facility has a maturity date of November 15, 2023. As of December 31, 2018 and 2017, $183.0 million and $142.1 million was borrowed, respectively, under the Credit Facility. Borrowing availability was $91.5 million as of December 31, 2018, which reflects $0.5 million of letters of credit outstanding.

The Credit Facility may be used for loans and, subject to a $2.5 million sub-limit, letters of credit, and provides for a commitment fee of 0.375% to 0.5% based on the unused portion of the borrowing base under the Credit Facility. As of December 31, 2018, the borrowing base and lender commitments for the Credit Facility was $275.0 million. The borrowing base under the Credit Facility is determined semi-annually as of May 1 and November 1.

Borrowings under the Credit Facility, at Lonestar's election, bear interest at either: (i) an alternate base rate (“ABR”) equal to the higher of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus 0.5% per annum, and (c) the adjusted LIBO rate of a three-month interest period on such day plus 1.0%; or (ii) the adjusted LIBO rate, which is the rate stated on Reuters screen LIBOR1 page, for one, two, three, six or twelve months, as adjusted for statutory reserve requirements for Eurocurrency liabilities, plus, in each of the cases described in clauses (i) and (ii) above, an applicable margin ranging from 1.50% to 2.50% for ABR loans and from 2.50% to 3.50% for adjusted LIBO rate loans). The weighted average interest rate on borrowings under the Credit Facility was 5.13% for the year ended December 31, 2018.

Subject to certain permitted liens, the Company's obligations under the Credit Facility have been secured by the grant of a first priority lien on no less than 80% of the value of the proved oil and gas properties of the Company and its subsidiaries (currently 90%).

The Credit Facility contains certain financial performance covenants, as defined in the Credit Facility, including the following:


•	A maximum debt to EBITDAX ratio of 4.0 to 1.0, and


•	A current ratio of not less than 1.0 to 1.0.

The Company was in compliance with the terms of the Credit Facility as of December 31, 2018.

Sixth Amendment

In connection with closing the Marquis Acquisition and the Battlecat Acquisition, in June 2017, Lonestar entered into the Sixth Amendment and Joinder to Credit Agreement (the “Sixth Amendment”) to (i) increase the borrowing base from $112 million to $160 million, (ii) modify the maximum leverage ratio threshold to be 4.0 to 1.0 for all periods, starting with the fiscal quarter ending September 30, 2017, and providing that EBITDAX (as defined in the Credit Facility) shall be calculated at the end of each fiscal quarter using the results of the twelve-month period ending with that fiscal quarter end; provided, that EBITDAX shall be calculated (x) at the end of the fiscal quarter ending September 30, 2017 using an amount equal to the EBITDAX for such fiscal quarter, multiplied by four, (y) at the end of the fiscal quarter ending December 31 ,2017 using an amount equal to the EBITDAX for the two fiscal quarter period ended on such date, multiplied by two and (z) at the end of the fiscal quarter ending March 31, 2018 using an amount equal to the EBITDAX for the three fiscal quarter period ended on such date, multiplied by four-thirds, (iii) permit the Company to declare and pay dividends equal to the amount of any cash dividends declared and payable in accordance with the terms of the Company’s Certificate of Designations of Convertible Participating Preferred Stock, Series A-1, and Certificate of Designations of Convertible Participating Preferred Stock, Series A-2, subject to certain specified terms and conditions and (iv) amend certain other provisions of the Credit Facility.

Seventh Amendment

In January 2018, the Company entered into the Limited Waiver, Borrowing Base Redetermination Agreement, and Amendment No. 7 to the Credit Agreement (the "Seventh Amendment"), which (i) maintained the borrowing base of $160 million until the next redetermination date; (ii) waived the borrowing base redetermination that would otherwise have occurred in connection with the incurrence of the 11.25% Senior Notes (see below), and (iii) amended certain other provisions of the Credit Facility, as set forth more specifically in the Seventh Amendment.

Eighth Amendment

In May 2018, the Company entered into the Borrowing Base Redetermination Agreement and Amendment No. 8 to Credit Agreement (the "Eighth Amendment"), which (i) increased the borrowing base from $160 million to $190 million and (ii) reallocated the commitments and outstanding loans among lenders, as set forth more specifically in the Eighth Amendment.

Ninth Amendment

In November 2018, the Company entered into the Ninth Amendment and Joinder (the "Ninth Amendment"), which (i) increased the borrowing base from $190 million to $275 million; (ii) extended the maturity date of the Credit Facility to November 15, 2023, and (iii) amended certain other provisions of the Credit Facility, as set forth more specifically in the Ninth Amendment.

11.25% Senior Notes

In January 2018, the Company issued $250.0 million of 11.250% Senior Unsecured Notes due 2023 (the “11.25% Senior Notes”) to U.S.-based institutional investors. The net proceeds of $244.4 million were used to fully retire the 8.75% Senior Notes (as defined below), which included principal, interest and a prepayment premium totaling approximately $162.0 million. The remaining net proceeds were used to reduce borrowings under the Credit Facility.

The 11.25% Senior Notes mature on January 1, 2023, and bear interest at the rate of 11.25% per year, payable on January 1 and July 1 of each year, beginning July 1, 2018. At any time prior to January 1, 2021, the Company may, on any one or more occasions, redeem up to 35% of the aggregate principal amount of the 11.25% Senior Notes with an amount of cash not greater than the net cash proceeds of certain equity offerings at a redemption price equal to 111.25% of the principal amounts redeemed, plus accrued and unpaid interest, provided that at least 65% of the aggregate principal amount of 11.25% Senior Notes originally issued remains outstanding immediately after such redemption and the redemption occurs within 180 days of the closing date of such equity offering.

At any time prior to January 1, 2021, the Company may, on any one or more occasions, redeem all or a part of the 11.25% Senior Notes at a redemption price equal to 100% of the principal amount redeemed, plus a “make-whole” premium and accrued and unpaid interest.

On and after January 1, 2021, the Company may redeem the 11.25% Senior Notes, in whole or in part, plus accrued and unpaid interest, at the following redemption prices: 108.438% after January 1, 2021; 105.625% after January 1, 2022; and 100% after July 1, 2022.

The indenture contains certain restrictions on the Company’s ability to incur additional debt, pay dividends on the Company’s common stock, make investments, create liens on the Company’s assets, engage in transactions with affiliates, transfer or sell assets, consolidate or merge, or sell substantially all of the Company’s assets.

8.75% Senior Notes

On April 4, 2014, Lonestar issued, at par, $220.0 million of 8.750% Senior Unsecured Notes due April 15, 2019 (the “8.75% Senior Notes”) to U.S.-based institutional investors.

Using proceeds from the issuance of the 11.25% Senior Notes, the Company fully retired the 8.75% Senior Notes in January 2018. Pursuant to the terms of the indenture noted above, the 8.75% Senior Notes were redeemed at 104.375% of the outstanding principal amount, or approximately $158.5 million, which excluded accrued interest. In connection with this transaction, the Company recognized an $8.6 million loss on extinguishment during the first quarter of 2018.

Debt Issuance Costs

The Company capitalizes certain direct costs associated with the issuance of long-term debt and amortizes such costs over the lives of the respective debt. At December 31, 2018 and 2017, the Company had approximately $1.7 million and $2.3 million, respectively, of debt issuance costs associated with issuance of the Credit Facility remaining that are being amortized over the lives of the respective debt which are recorded as Other Non-Current Assets in the accompanying consolidated balance sheets.

Securities Purchase Agreement and Second Lien Notes

On August 2, 2016, Lonestar entered into a Securities Purchase Agreement with Juneau Energy, LLC, as initial purchaser (“Juneau”), Leucadia National Corporation (“Leucadia”), as guarantor of Juneau’s obligations, the other purchasers party thereto and Jefferies, LLC, in its capacity as the collateral agent for the purchasers, relating to the issuance and sale of (i) up to $49.9 million aggregate principal amount of the Company's 12% Senior Secured Second Lien Notes due 2021 (the “Second Lien Notes”) and (ii) five-year warrants to purchase up to an aggregate 998,000 shares of the Company’s Class A voting common stock at a price equal to $5.00 per share (the “Warrants”). The balance of the warrants is reflected in Equity Warrant Liability – Related Parties on the accompanying consolidated balance sheets. The Second Lien Notes were secured by second-priority liens on substantially all of the Company and its subsidiaries’ assets to the extent such assets secure obligations under the Credit Facility.

During 2016, the Company issued $38.0 million in aggregate principal amount of Second Lien Notes and issued Warrants to purchase 760,000 shares of its Class A voting common stock. The Company recorded an equity warrant liability of approximately $5.1 million which was the fair value amount at the date of issuance. The Warrants were adjusted to fair value at December 31, 2018 which resulted in a gain on the Warrants of approximately $0.4 million for the year ended December 31, 2018, which is recorded in the accompanying consolidated statements of operations. Proceeds from the Second Lien Notes issuance were used to repurchase approximately $68.2 million in aggregate principal amount of the 8.75% Senior Notes in privately negotiated open market repurchases with holders of such notes, and to pay related fees and expenses related to the foregoing. The repurchase amounts paid were approximately $36.2 million in cash.

In December 2016, the Company repaid $21.0 million principal of the Second Lien Notes with proceeds from the offering of the Company’s Class A voting common stock (the “2016 Common Stock Offering”).

In June 2017, the Company repaid the remaining $17.0 million principal of the Second Lien Notes including an early payment premium of approximately $1.1 million with borrowings from the Credit Facility.

As of December 31, 2018, our debt is payable over the next five years and thereafter as follows:




In thousands
2019	$	62
2020	66
2021	71
2022	76
2023	433,006
Thereafter	9,145
Total debt	$	442,426