Greka Drilling Limited announced Thursday that it has secured $5 million in loan financing from Guaranty Finance Investors LLC, which it expects to use for working capital purposes.
The loan, on which interest is payable at the rate of seven percent per annum, is repayable on March 31, 2019. As part of the financing, Greka has issued GFI with warrants to subscribe for 35,000,000 new ordinary shares in the company at an exercise price of GBP 0.05 ($0.07) per share, representing a premium of 43 percent to Greka’s closing share price on March 29.
The warrants are exercisable at any time between April 1, 2017 and March 31, 2019. At any time after March 31, 2017 the company may elect to prepay the loan, provided that the amount repaid would provide GFI with a total annual return of 25 percent.
Chairman and Chief Executive of Greka Drilling, Randeep S. Grewal, commented in a company statement:
"This loan provides comfort and flexibility for the balance sheet over what we anticipate to be a period of limited activity for the business as announced on February 5, 2016. The company has enjoyed a long term relationship with GFI and is pleased that this loan demonstrates their long term belief in our business model and potential for the future".
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