Baron Oil plc has received repayment of its loan to Infrastrata plc and agreed an amendment to the Convertible Loan Facility Agreement, with respect to the Islandmagee gas storage project in Northern Ireland.
Under the terms of the agreement, originally announced in May 2015, Baron provided a loan for $2 million (EUR 1.8 million) to InfraStrata. These funds were used as working capital to bridge the receipt of the European Commission grant, 70 percent of which (EUR 1.8 million) was received on completion of the work program as announced on May 25.
The program included the drilling of the Islandmagee-1 well, drilled successfully in May/June 2015, together with subsequent rock mechanical testing of salt cores and engineering work. The loan was subject to an interest rate of 8 percent of the funds drawn down. Baron originally had a right to extend the loan period until December 31.
Baron also had an accompanying option to convert the entire balance of the loan into an equity participation of 15 percent of the share capital in Infrastrata's subsidiary, Islandmagee Storage Limited (IMSL). Should the option be exercised, the equity would be provided pro-rata by InfraStrata and its project partner, Moyle Energy Investments Limited (Moyle), as the other shareholder of IMSL. The amendment to the agreement results in the option continuing to March 31 2017, but the loan has been repaid, effective August 1, from the balancing monies received from the European Commission. The option as amended enables Baron to acquire a 15 percent interest in the IMSL project for a payment of $2,015,985 (GBP 1,536,498).
"We are pleased to have secured an extension of the option to 31 March 2017, as this will give us more time to assess progress on the Islandmagee storage project as the situation in the field unfolds, keeping an eye on the impact the closure of the Rough gas storage facility, in the UK North Sea, may have on gas prices in the UK,” said Malcolm Butler, Baron Oil chief executive, in a company statement.
“Additionally the early repayment of the loan provides Baron more financial flexibility for us to begin to investigate new projects," he added.
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