EXCO Resources Inc. (NYSE: XCO) reported a series of transactions to improve capital structure on March 15. They include a note issuance and an exchange of term loans.

There was issuance of $300 million in senior secured 1.5 lien notes due March 20, 2022. They were issued to affiliates of Fairfax Financial Holdings Ltd., Energy Strategic Advisory Services LLC (ESAS), Oaktree Capital Management LP and an unaffiliated investor.

The proceeds from the issuance repaid the outstanding amount under EXCO's credit agreement, transaction fees and expenses, and general corporate purposes. The credit agreement was amended, reducing the borrowing base to $150 million, permitting the notes and loans issuance and modifying certain financial covenants.

About $683 million of senior secured second-lien term loans due October 26, 2020, were exchanged for a like amount of senior secured 1.75 lien term loans due October 26, 2020.

CEO and President Harold L. Hickey said that the capital is being used in locations in the Haynesville Shale that could generate returns, based on year-end 2016 futures prices, of more than 100%. He also said capital is going toward the 850 gross (280 net) operated locations in the portfolio with rates of return exceeding 25%.

In the exchange, affiliates of Fairfax purchased about $151 million aggregate principal amount of the 1.5 lien notes and exchanged about $412 million aggregate principal amount of the second-lien term loans for a like amount of the 1.75 lien term loans.

Affiliates of Fairfax are current beneficial owners of 9.9% of EXCO's common shares. Samuel A. Mitchell, a member of EXCO's board of directors, is a managing director of Hamblin Watsa Investment Counsel Ltd., the investment manager of Fairfax and certain affiliates thereof.

ESAS purchased about $70 million of the 1.5 lien notes and exchanged about $48 million of the second-lien loans. ESAS is owned by Bluescape Energy Recapitalization and Restructuring Fund III LP, which is directed by its general partner, Bluescape Energy Partners III GP LLC and is the current beneficial owner 6.6% of EXCO's common shares. Charles John Wilder, the executive chairman of EXCO's board of directors, is the sole manager of Bluescape.

Affiliates of Oaktree purchased about $40 million of the 1.5 lien notes. Affiliates of Oaktree are the current beneficial owners of 11% of EXCO's common shares, and B. James Ford, a member of EXCO's board of directors, is a senior adviser of Oaktree.

These transactions were approved by a special committee of the board of directors consisting of the sole disinterested member. The board authorized and approved the transactions based on the recommendation of the special committee.