Ithaca Energy Reports on Agreement for Early Conversion of Dyas Loan
Ithaca has entered into an agreement with Dyas UK Limited for the conversion of Dyas' US $61.2 million outstanding secured loan.
Under the agreement entered into in October 2008, Dyas had the option to convert the US $61.2 million loan by 1st November 2010 in consideration for the purchase of an additional 15.15% of all of Ithaca's interests held at November 1, 2008.
Upon the early conversion of the Dyas loan, Ithaca will become debt free and will receive an additional cash payment from Dyas of approximately US $35.8 million in exchange for Dyas taking further equity in all of its properties, including the Jacky and Beatrice fields, in addition to the 15.15% interest entitlement under the 2008 Option.
In addition, equity in all of Ithaca's remaining exploration assets will also be transferred, such that Dyas will acquire a final equity holding equivalent to 50% of Ithaca's equity positions immediately prior to the Effective Date.
The total aggregate consideration for this revised transaction will be approximately US $97 million. Based on the Company's evaluation of proven and probable reserves as at December 31, 2008, Ithaca is selling 11.6 million developed and undeveloped barrels of oil equivalent (boe) at a price of US $8.36 per boe.
The key benefits to Ithaca as a result of this transaction are:
- Receipt of a cash payment of approximately US $35.8 million which will provide funding for additional projects in particular to enhance production from Jacky and Beatrice areas, to appraise Stella and to seek new opportunities to broaden its asset base;
- Strong cash position with no debt;
- Reduced working interests ahead of major capital expenditures on Stella, Carna and the Beatrice Area; and
- Improved forward planning with no Dyas option overhang.
The transaction is subject to the approval of the UK Department for Environment and Climate Change ('DECC'), Talisman Energy and usual third party consents. The TSX Venture Exchange has approved the transaction subject to the usual post closing filing conditions.
Iain McKendrick, CEO of Ithaca said, "This is a major step forward, putting the Company onto an excellent long term footing. This revised deal leaves the Company debt free and with financial resources sufficient to finance a manageable future capital expenditure program that will develop existing projects as well as new opportunities. The Company now has a diverse portfolio and is poised for growth from the platform that has been created through this second transaction with Dyas. I regard this as a transformational move, securing the future of Ithaca in an exciting environment in which to expand."
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