Melrose Resources plc announces that it has entered into agreements which increase the amount of its bank borrowing facilities and extend the term of the financing arrangements.
The amount of Melrose's senior secured borrowing facilities has been increased from $350 million to $440 million. In addition, a new subordinated secured facility of $70 million has been put in place, giving total debt capacity of $510 million. Both the facilities are fully committed and have a final repayment date at the end of 2014. The loans amortize in instalments from April 2012. A further increase in the senior facility is planned before year-end.
A short-term loan which was obtained in October 2007 from the Bank of Scotland has been repaid and Melrose's current net indebtedness is $414 million.
The interest margins payable on the new facilities have reduced compared with the Company's previous facilities. The margin on the new facilities, if fully drawn, would be approximately 3.2%, which, assuming a US$ LIBOR rate of 3%, would result in an interest rate on the facilities of approximately 6.2%.
The principal lenders under the new facilities are the Bank of Scotland, Mandated Lead Arranger, and BNP Paribas, Société Generale and the IFC as Senior Lead Arrangers. In addition, four banks which were previously lenders under Melrose's senior bank borrowing facility have increased their participation in the senior facility and one new bank has joined the syndicate.
"We are very pleased to have put these new facilities in place at a time of considerable uncertainty in the debt markets," said David Thomas, chief executive of Melrose. "The good support we have received from our banks is a reflection of the strong production and reserves base which Melrose has established over recent years. The new facilities provide us with substantial borrowing headroom and we are well placed to pursue our highly active exploration and development program."
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