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LONDON (Alliance News) - Empyrean Energy PLC Wednesday said it has signed an additional debt funding deal with Macquarie Bank Ltd, which will allow the company to continue to participate in its flagship Sugarloaf AMI Project onshore Texas.
The oil and gas explorer and producer said it has reached an agreement with Macquarie Bank for additional debt funding under Tranche B of its existing facility. Macquarie has agreed to make USD11 million available to Empyrean immediately, and Macquarie has indicated that further amounts may also be available in due course, subject to satisfaction of certain conditions, including further credit approvals and well performance and reserve hurdle criteria.
The total amount outstanding on the facility following the deal is USD21.7 million. The interest rate payable on the facility will remain unchanged at 9% a year plus the London Interbank Offered Rate, or LIBOR.
The funds from the deal will be used to allow the company to continue to participate in the Sugarloaf project, in which it has a 3% stake. The project is operated by Marathon Oil Co, a subsidiary of US major Marathon Oil Corp.
In order to secure the financing, Empyrean has conditionally agreed to issue a further tranche of options to Macquarie in respect of 15.0 million shares at an exercise price of 10.0 pence per option and with an expiry date of four years from the date of issue.
Empyrean shares were up 5.7% to 7.00 pence per share on Wednesday morning.
The company does not currently have sufficient authority to enable the grant of the options and, accordingly, shareholder approval will be sought for the grant of the options at a meeting to be held in July.
"In the event that such shareholder approval is not obtained, the company will be required to pay to Macquarie an amount in cash or other consideration acceptable to Macquarie having a value equivalent to the Options which have not been granted," said the company.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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