Constellation Energy Partners (CEP) Completes Borrowing Redetermination and Suspends Qrtly Cash Distribution

June 26, 2009 7:46 AM EDT

Constellation Energy Partners LLC (NYSE: CEP) reported that its lenders have completed a semi-annual review of the company's borrowing base pursuant to the terms of its credit agreements. Based on this review, the aggregate borrowing base under the credit agreements has been set at $225 million. The aggregate borrowing base had previously been set at $265 million.

As of June 25, 2009, borrowings outstanding under the company's credit agreements totaled $220 million, leaving the company 98% drawn on its lines of credit. Under the terms of the company's credit agreements, no distributions to unitholders may be made if the borrowings outstanding under the credit facilities, net of available cash, exceed 90% of the borrowing base. As of June 25, 2009, the company had $10.2 million in available cash, leaving the company 93% drawn on its lines of credit, net of available cash. As a result, the company will temporarily suspend quarterly cash distributions to its common (or Class B) and Class A unitholders effective immediately.

"We continue to see signs of distress in the economy and financial markets as well as weakness in the price of natural gas," said Stephen Brunner, the company's President and Chief Executive Officer. "While we believe the company has sufficient cash on hand, operating cash flows and available credit to manage the company, distributions to unitholders are currently not permitted based on the requirements of our credit facilities. We currently intend to retain surplus cash as we execute our operating plan for the remainder of 2009."

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