Senior Secured Debt Facility of up to $75 million
March 09 2010 - 2:01AM
UK Regulatory
TIDMPELE
RNS Number : 2712I
Petrolatina Energy PLC
09 March 2010
EMBARGOED FOR RELEASE NOT BEFORE 07.00
9 March 2010
PetroLatina Energy Plc
("PetroLatina" or the "Company")
Senior Secured Debt Facility of up to $75 million
PetroLatina (AIM: PELE), the independent oil and gas exploration, development
and production company focused on Latin America, announces that it has entered
into a senior secured credit agreement with Macquarie Bank Limited ("MBL").
In accordance with the terms of the agreement, MBL has committed to provide a
loan facility of, in aggregate, up to $75 million to the Company in order to
assist with financing the accelerated development and enhancement of its highly
promising oil and gas assets in Colombia. An initial $25 million tranche
("Tranche A") has been made available for drawdown on completion of the facility
documentation yesterday.
Highlights:
· Since the original investment made by Tribeca Oil & Gas Inc. in July
2008, the Company has made considerable progress, including:
o Commenced an aggressive drilling campaign with 8 new successful wells being
drilled in 2009 increasing production by 259% to 1,004 barrels of oil per day
("bopd") net from an average 280 bopd net in 2008;
o Announced an updated independent assessment of its reserves, future
production and income attributable to its concessions in Colombia as at 30
November 2009. Ryder Scott Company, L.P. ("Ryder Scott"), the independent
petroleum consultants, provided an NPV10 value for the Company's 3P reserves of
$247 million;
o Completed a further successful well, the Zoe-1 exploration well, since the
beginning of 2010, with two potentially oil-bearing sections identified;
o Plans to drill up to a further 8 new wells over the remainder of this year to
increase production and reserves with the expectation of substantially
increasing Possible Reserves, identified by Ryder Scott, as well as moving an
element of them into the Probable Reserves and Proved Reserves categories;
o Strengthened the operational and management team;
o Reduced General & Administration costs and expenses; and
o Appointed Evolution Securities Limited as a new joint broker.
· MBL has entered into an agreement to provide a four year Senior First
Lien Secured Credit Facility of up to, in aggregate, $75 million (the "Senior
Facility") to the Company and its subsidiaries, in order, inter alia, to finance
part of the Company's planned ongoing drilling programme.
· The Senior Facility comprises:
o Tranche A: $25 million of the Senior Facility was made available by MBL on
closing yesterday to, inter alia, part-fund the Company's current exploration
and development operations in Colombia; and
o Tranches B/C: up to a further $50 million, in aggregate, available at MBL's
discretion for further pre-agreed development work, potential future approved
acquisitions and general working capital purposes.
· In connection with the drawdown of Tranche A of the Senior Facility, the
Board has allotted warrants to MBL to subscribe for 8 million new ordinary
shares of $0.10 each in PetroLatina ("Ordinary Shares") at an exercise price of
75.7 pence per share, an approximate 42.2 per cent. premium to the Company's
closing mid market share price on 8 March 2010 of 53.25 pence. The Board has
also agreed to allot additional warrants, on a fixed incremental basis, in the
event of drawdowns under Tranches B and/or C, further details of which, along
with the other key terms of the Senior Facility, are summarised below.
During negotiations in respect of the Senior Facility, MBL has recently provided
an interim bridge facility to the Company of $5 million (the "Bridge Facility").
The Bridge Facility has been repaid in full out of the Tranche A proceeds. The
remainder of the Tranche A funds will be utilised to repay all of the Company's
other existing short term indebtedness (save for the short-term indebtedness
over the Company's pipeline asset which is fully serviced by revenues generated
by the pipeline), reduce the general level of trade creditors and to part-fund
the Company's planned ongoing work programme.
Luc Gerard, Executive Chairman of PetroLatina, commented:
"The Senior Facility provides us with the financial and operational flexibility
to enable PetroLatina to take advantage of the current rapid growth in the Latin
American energy market. As part of the financing of the growth of the business,
the Company will look to have in place an appropriate mix of debt and equity.
The Senior Facility signed with MBL is consistent with this strategy, enhancing
our liquidity as we continue to execute our long-term exploration and
development programme for our extensive asset base in Colombia.
We continue to believe that Latin America, and in particular Colombia, offers
attractive consolidation, corporate and new license acquisition opportunities;
the upcoming 2010 new open bid round where Colombia's upstream regulator,
Agencia Nacional de Hidrocarburos (ANH) is offering exploration rights to 168
blocks covering more than 50m hectares of territory, 63 Technical Evaluation
licences and 74 smaller blocks of between 30,000 and 40,000 hectares, close to
existing producing areas, is one such example of these potential opportunities."
Juan Carlos Rodriguez, Chief Executive Officer of PetroLatina, commented:
"As stated previously, our plan continues to be to convert our Probable and
Possible Reserves into Proved Reserves and considerably increase production and
cash flow through the ongoing drill programme. Ryder Scott's latest reserves
assessment also reviewed the exploration prospects currently being evaluated by
PetroLatina and concluded that our estimate that these could contain
approximately 19.24 million barrels of recoverable oil on an unrisked basis was
reasonable. These Prospective Resources principally relate to resources
potentially recoverable from: (a) the Zoe prospect on the Midas block; (b)
potential extensions to the existing PetroLatina operated Santa Lucia field,
where development drilling is currently under way; (c) resources potentially
relating to a structural prospect known as the Santa Lucia Sur; and (d) the
extension to the south of that same Santa Lucia Sur prospect into the La Paloma
block.
This facility provides us with the financial and operational flexibility to
build on the currentdrilling momentum and appraise and develop further
discoveries without limiting our ability to effectively finance our planned
ongoing and future exploration and development programmes."
Key terms of the Senior Facility
The principal terms of the Senior Facility are as follows:
· The Senior Facility has a committed initial Tranche A of $25 million,
with up to a further potential $50 million potentially available for drawdown,
in aggregate, under Tranches B and/or C;
· The Company's total borrowing capacity or base under the Senior Facility
will be subject to periodic review and adjustment, principally to fund
additional exploration and development activities, with the total funds
available for drawdown at any given time subject to a number of factors,
including reserve levels and MBL's internal approvals;
· The Senior Facility may be partially or fully prepaid at the end of any
LIBOR period on three business days' prior notice without penalty to the
Company;
· The Senior Facility has a four-year term to 7 March 2014 (the "Final
Maturity Date"), with repayment on a quarterly linear amortisation basis of the
then outstanding principal balance commencing thirty months prior to the Final
Maturity Date;
· The Senior Facility is secured over all of PetroLatina's exploration and
production assets in Colombia (save for the Rio Zulia-Ayacucho pipeline and its
revenues which are pledged to an existing third party debt provider);
· Interest is payable monthly on amounts drawndown by the Company at a rate
ranging from 3 month US dollar LIBOR plus 7.5% to 3 month US dollar LIBOR plus
9%, depending upon the underlying independently confirmed value of the Company's
proved oil and gas reserves. Current 3 month US dollar LIBOR is approximately
0.25%;
· Under the terms of the Senior Facility, on drawdown yesterday of Tranche
A, MBL has been issued with warrants to subscribe for 8 million Ordinary Shares
at any time within the next five years. The exercise price per warrant has been
fixed at 75.7 pence per Ordinary Share;
· Tranche B of the Senior Facility comprises up to a further $50 million
and is available for drawdown within 36 months at MBL's discretion, for further
pre-agreed development work, potential acquisitions and general working capital
purposes. On drawdown of further potential amounts under Tranche B, warrants to
subscribe for up to 12 million additional new Ordinary Shares are to be issued
to MBL on an agreed fixed incremental basis. The exercise price of such
additional 12 million warrants will be equal to a 20 per cent. premium to the
Company's volume weighted average share price ("VWAP") over the 20 consecutive
business days immediately prior to the date of MBL committing the additional
funds for drawdown. The warrants will be capable of exercise at any time within
five years of their date of issue;
· In order to provide maximum funding flexibility to the Company, MBL has
also agreed to make available - at its discretion - an alternative Tranche C
facility of up to $50 million ("Tranche C") for the development of the Company's
existing assets. In the event that any drawdown was to occur under Tranche C, as
well as allotting up to 12 million warrants on the same fixed incremental basis
as for Tranche B above, the Company will be required to issue additional
warrants to MBL. The quantum of such additional warrants is to be determined by
reference to a pre-agreed formula based on the amount drawndown divided by the
figure which represents a 15 per cent. discount to the Company's VWAP over the
20 consecutive business days immediately prior to the date of MBL committing the
additional funds for drawdown. The exercise price of such additional warrants
will be equal to a 15 per cent. discount to the VWAP over the 20 consecutive
business days immediately prior to the date of MBL committing the additional
funds for drawdown and they will be capable of exercise at any time within five
years of their date of issue. The Board does not currently anticipate having to
utilise Tranches B or C, but does expect to achieve an appropriate mix of debt
and equity to fund the Company's planned ongoing and future drilling programmes;
· The documentation governing the Senior Facility contains usual and
customary affirmative financial, operational and corporate covenants for a
credit facility of this nature, including but not limited to the Company's:
continuation of business and maintenance of existence; compliance with relevant
laws; maintenance of appropriate insurance; delivery of financial statements,
reports, accountants' letters, projections, officers' certificates and other
information requested by MBL; maintenance of financial ratios within certain
defined ranges; use of proceeds; compliance with environmental laws and
preparation of environmental reports. Further provisions cover notices of
defaults; litigation, maintenance of books and records and the right of MBL to
inspect property and records;
· The documentation also contains usual and customary representations and
warranties for facilities of this type, negative covenants and appropriate
additional covenants in the context of the proposed use of funds, including but
not limited to: indebtedness; liens; investments; mergers; consolidations;
material sales of assets and acquisitions; change of control; dividends;
distributions and other restricted payments;
· In addition, PetroLatina has hedged an agreed percentage of its
production attributable to its proved developed producing reserves for a period
through to one year beyond the Final Maturity Date and agreed to maintain
appropriate levels of currency and interest rate hedging; and
· PetroLatina has agreed to pay MBL a commitment fee of 1.75% of the
aggregate amount committed for drawdown under the Senior Facility from time to
time.
MBL had a pre-existing interest in 1,494,817 Ordinary Shares representing
approximately 3.24 per cent. of the Company's issued ordinary share capital, and
holds 1,400,000 warrants to acquire, in aggregate, a further 1,400,000 Ordinary
Shares. Immediately following completion of the Senior Facility and the
Company's drawdown of Tranche A yesterday, MBL is now interested in 1,494,817
Ordinary Shares, and holds 9,400,000 warrants to acquire, in aggregate, a
further 9,400,000 Ordinary Shares
Enquiries:
+-----------------------------------------------+--------------------+
| PetroLatina Energy Plc | |
| Juan Carlos Rodriguez, Chief Executive | Tel: +57 1627 8435 |
| Officer | |
+-----------------------------------------------+--------------------+
| Pawan Sharma, Executive Vice President - | Tel: +44 (0)20 |
| Corporate Affairs | 7766 0081 |
+-----------------------------------------------+--------------------+
| | |
+-----------------------------------------------+--------------------+
| Strand Hanson Limited | |
+-----------------------------------------------+--------------------+
| Simon Raggett / Matthew Chandler | Tel: +44 (0)20 |
| | 7409 3494 |
+-----------------------------------------------+--------------------+
| | |
+-----------------------------------------------+--------------------+
| Evolution Securities Limited | |
+-----------------------------------------------+--------------------+
| Rob Collins / Chris Sim | Tel: +44 (0)20 |
| | 7071 4304 |
+-----------------------------------------------+--------------------+
| | |
+-----------------------------------------------+--------------------+
| Financial Dynamics | |
+-----------------------------------------------+--------------------+
| Ben Brewerton / Susan Quigley | Tel: +44 (0)20 |
| | 7831 3113 |
+-----------------------------------------------+--------------------+
Additional Information on PetroLatina Energy Plc:
PetroLatina Energy Plc (AIM: PELE) is presently focused on Colombia where it
currently holds 45% and 20% interests respectively in the Los Angeles and Santa
Lucía fields on the Tisquirama licence, and a 100% interest in the Doña María
field. In November 2007 the Company secured the extension of the Tisquirama
licence for the economic life of the fields. In April 2006 the Group acquired an
interest in two exploration blocks: an 85% interest in Midas and an 80% interest
in La Paloma. PetroLatina also owns the Río Zulia-Ayacucho pipeline in the
prolific Catatumbo basin which transports crude oil. Present
exploration/exploitation activities in this area should increase the volume of
crude oil transported resulting in an increased cash flow. Having sold its
assets in Guatemala it retains a 20% interest in the first three wells and a 20%
working interest in future wells. Further information is available on the
Company's website (www.petrolatinaenergy.com).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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