LONDON, Sept. 29, 2014
/PRNewswire/ -- Nighthawk, the US focused oil development and
production company (AIM: HAWK and OTCQX: NHEGY), announces that it
has completed the agreement with Commonwealth Bank of Australia ("CBA") for the US$100 million Reserve Based Lending ("RBL")
facility announced last month.
Key Features of the RBL
- US$100 million Senior Secured
Revolving RBL facility with an initial borrowing base of
US$35 million
- Four year maturity with potential for extension by
agreement
- Regular redeterminations based upon Nighthawk's petroleum
reserves – first redetermination in late fourth quarter 2014
- Interest rates at a competitive premium to US Libor rates
enabling Nighthawk to reduce substantially its borrowing costs
- The Company will be required to implement a hedging strategy
and hedge a proportion of its forward production
- Restructuring and reduction of current debt
Background and Business Impact
The refinancing of Nighthawk in January
2012 provided the funding base to acquire a 100% working
interest and operational control of the Company's acreage position
in Colorado. This refinancing
included amongst other mechanisms, convertible loan notes primarily
issued to the Company's major shareholders.
Over the past two years Nighthawk has established a solid
foundation for future expansion by focusing on rapid growth in
production and cash generation. The Company has a relatively low
cost base, both operational and overheads, and all free cash
generated has been reinvested in drilling, development and
geoscience. In order to maintain a fast pace of development, the
Board has from time to time utilized access to short-term loans
provided by the Company's major shareholders and other parties
including additional convertible loan notes.
The RBL agreement with CBA provides the financial backing to
restructure the current debt whilst increasing the level of
investment in the business and maintaining the rapid pace of
development that the Company has delivered over the past two years.
As part of the agreement and as a condition for initial drawdown
against the RBL facility, CBA required restructuring of Nighthawk's
current debt.
Restructuring of Current Debt
- The redemption date on £5.17 million outstanding of zero coupon
loan notes due January 2015 will be
deferred to March 2019
- The redemption date on £3.14 million outstanding of 9% coupon
loan notes due June 2015 will be
deferred to March 2019
- $10 million of short-term
unsecured debt will be repaid immediately
The Company has drilling and development plans in place for the
balance of 2014 and early 2015 which includes further development
drilling at Arikaree Creek and Snow King, the Company's first
horizontal well, and further exploration of structural plays. In
order to ensure certainty that funding is available for investment
in this plan, repayment of the remaining balance of $10 million of short-term unsecured debt will be
contractually deferred until March
2019. However, the Board considers it likely that further
production growth and drilling success will result in an increase
in the borrowing base of the RBL and earlier repayment of this
remaining debt, subject to agreement with CBA.
Restructuring of Warrants
The Company has also agreed to an extension of the exercise
dates on certain warrants issued to the providers of debt to the
Company as follows:-
- 100 million warrants with a strike price of 5 pence per share were issued in January 2012 in lieu of interest payments on the
zero coupon loan notes due January
2015. The exercise date on these warrants is extended
initially to March 2019. Certain
holders of these loan notes are restricted from conversion under
Rule 9 of the UK Takeover code. The Company may claw back the
exercise date to September 2017 in
the event that it delivers by 23 January
2015 an arrangement which enables conversion by such holders
without a breach of Rule 9 of the Takeover Code.
- 30 million warrants with a strike price of 7.25 pence per share were issued in July 2013 in lieu of security on the short-term
funding provided to enable exercise of the option to purchase
Running Foxes Petroleum Inc's remaining 25% working interest. The
exercise date on these warrants is extended to March 2019 in lieu of security on the extended
$10 million unsecured loan.
Related Party Matters
The restructuring of debt and warrants has been agreed between
the lenders, principal warrant holders and Nighthawk's board of
directors and meets CBA's requirements for initial drawdown of the
new RBL facility. A significant proportion of the restructured debt
and the warrants is held directly or indirectly by the Company's
two largest shareholders Johan
Claesson, who is also a non-Executive Director of the
Company, and Peter Gyllenhammar.
The restructured debt and warrants held by Johan Claesson and parties associated with him
is as follows:-
- £4.1 million of zero coupon loan notes due January 2015 to be deferred to March 2019
- £1.6 million of 9% coupon loan notes due June 2015 to be deferred to March 2019
- $10 million of short-term
unsecured 15% coupon debt to be contractually deferred until
March 2019
- 55 million warrants with a strike price of 5 pence per share issued in January 2012 with the exercise date extended to
March 2019, with potential claw-back
to September 2017
- 30 million warrants with a strike price of 7.25 pence per share issued in July 2013 with the exercise date extended to
March 2019
Johan Claesson is a non-executive
director and a substantial shareholder of the Company and therefore
the restructuring of the debt and the warrants is a related party
transaction under the AIM Rules for Companies. The Directors of
Nighthawk (other than Johan
Claesson) consider, having consulted with Westhouse
Securities Limited, the Company's Nominated Adviser, that the terms
of the transaction are fair and reasonable in so far as the
Company's shareholders are concerned.
The restructured debt and warrants held by Peter Gyllenhammar
and parties associated with him is as follows:-
- £0.6 million of zero coupon loan notes due January 2015 to be deferred to March 2019
- £0.3 million of 9% coupon loan notes due June 2015 to be deferred to March 2019
- 20 million warrants with a strike price of 5 pence per share issued in January 2012 with the exercise date extended to
March 2019, with potential claw-back
to September 2017
Stephen Gutteridge, Chairman
of Nighthawk, commented:
"We are pleased to have closed the RBL agreement with the
Commonwealth Bank of Australia. We
have ambitious drilling and development plans for the rest of this
year and next and our first priority as a board is to ensure that
we can fund those plans and maintain the momentum that we have
built up over the past two years. With the immediate repayment of
$10 million of existing high coupon
debt we will make substantial debt service cost savings, and the
restructuring of the remaining debt will ensure that we retain the
operational and financial flexibility to deliver increased value
from the significant potential in our acreage."
Enquiries:
Nighthawk Energy
plc
Stephen Gutteridge,
Chairman
Richard Swindells,
Chief Financial Officer
|
020 3582 1350
|
|
|
Westhouse
Securities Limited
Alastair
Stratton
Robert
Finlay
|
020 7601
6100
alastair.stratton@westhousesecurities.com
robert.finlay@westhousesecurities.com
|
|
|
FTI
Consulting
Ben
Brewerton
Ed
Westropp
|
020 7831
3113
ben.brewerton@fticonsulting.com
edward.westropp@fticonsulting.com
|
SOURCE Nighthawk Energy plc