Tom Brown, an exploration and crude oil and natural gas production company, has landed a new $425 million senior unsecured bank credit facility and a $155 million bridge loan to finance the $373 million acquisition of Matador Petroleum Corp. J.P. Morgan is leading both lines. The old $300 million revolver did not have the capacity to finance this transaction, noted Mark Burford, assistant treasurer of Tom Brown. A company "can't always choose the timing for an acquisition, but rather must act when an opportunity presents itself," he explained. "Tom Brown regularly evaluates opportunities for acquisitions, and when a company [like Matador] that fits your requirements becomes available, you have to take advantage of that opportunity," he added.
The Denver-based company is examining capital markets alternatives to replace the bridge loan, including the issuance of equity and debt securities. If Tom Brown does issue equity, J.P. Morgan will lead the equity offering, Burford added. J.P. Morgan led Tom Brown's previous facility and the company did not really evaluate other firms to lead the new deal, said Burford. Tom Brown was comfortable with the bank already and felt that it facilitated the best pricing and terms, he added. Burford would not specify the new or old pricing. Wachovia Bank, BNP Paribas and Scotia Capital round out the bridge line, he said. The syndicate for the $425 million revolver includes these banks, as well as Wells Fargo, US Bank, Comerica Bank, Bank of Scotland, National Bank of Canada, UFJ Bank, Washington Mutual and Bank of Oklahoma. Wachovia, Bank of Scotland, and UFJ were not part of the old $300 million revolver.