Sino G&E Secures $50M Debt Facility to Fund Ordos Basin Projects
Sino Gas & Energy Holdings Limited (Sino Gas or the Company) disclosed Wednesday that, following a competitive process, it has signed a term sheet with Macquarie Bank Limited (Macquarie) to act as sole lender of a structured term debt facility of up to $50 million (the Facility).
Proceeds are to be used to support Sino Gas’ payments of its share of cash calls by joint venture entity Sino Gas & Energy Limited (SGE) to fund SGE’s working interests in the Linxing and Sanjiaobei Production Sharing Contract’s (PSC’s), located in the Ordos Basin, Shanxi Province, China.
Commenting on the binding agreement Gavin Harper, chairman of Sino Gas, said:
“With $57 million in cash as at the end of the March quarter and the Facility of up to $50 million, Sino Gas is strongly positioned to fund its development share of the PSCs towards early production and Overall Development Plan submissions and start the transition to becoming a significant gas producer”.
“Sino Gas has undertaken a strongly contested and rigorous tender process for the Facility and has negotiated very competitive terms with a reasonable headline interest rate and most importantly limited dilution to our shareholders with a modest number of options issued at a significant premium to our current share price”.
“Macquarie has an excellent reputation as a leading international investment bank and combined with its proven depth of experience in financing oil and gas projects globally, we see their involvement as a major endorsement of Sino Gas and our projects,” he added.
Key terms of the facility are:
- Tranche A: $10m committed and available to be drawn down on execution of Facility documentation and satisfaction of customary conditions precedent (including finalizing due diligence)
- Tranche B: $40m subject to satisfaction of further conditions precedent including Macquarie obtaining internal credit approvals
- Amortizing term loan with final maturity of Dec. 31, 2016
- Libor + 9.75 percent interest rate and no commitment fees
- The Facility is to be secured against the Company’s assets including its shares in SGE
- Sino Gas options:
- 30 million four year options to be issued with an exercise price of $0.23 (AUD 0.25) per share on execution of Facility documentation, of which 15 million options are issued under no conditions and 15 million options will be cancelled unless Tranche B conditions precedent are satisfied or a change of control occurs
- 20 million four year options to be issued at the volume weighted average price per share over the 30 days prior to initial drawdown of Tranche B (subject to cap of $0.47, or AUD 0.50, and floor of $0.18 or AUD 0.20 per share)
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