LONDON (Alliance News) - LGO Energy PLC said Wednesday it has agreed to pay off its existing bank debt and put in place a new funding facility, in order to get out of its current default position.
LGO said it has agreed new USD8.6 million convertible security funding agreement with Lind Partners LLC. Of that, USD1.8 million will initially be used to settle its remaining debt to BNP Paribas, which will take it out of its covenant default position.
That default, which occurred in October 2015, has left LGO "unable to deploy significant capital to oil-field operations in Trinidad throughout 2016" and the company said it will now be able to operate freely.
LGO said it anticipates the first drawdown will be repaid over 24 months from free cash flow, but noted that Lind has the right to convert the balance of the funding agreement into equity at 0.15 pence a share. This is an approximately 45% premium to the 20-day average prior to the agreement. LGO also may make monthly repayments in equity, calculated at the share price at the time of payment.
Shares in LGO were up 16% at 0.125 pence Wednesday.
"We are delighted that LGO will now be able to advance the drilling and production campaign in Goudron. This has been a challenging period for the company with the falling oil price and the loss of downhole equipment in the GY-678 well resulting in the breach of the covenants on the company's loan facility with BNPP. This is therefore a major turning point for LGO," said Neil Ritson, chief executive of LGO.
"We are pleased with the support of Lind who are providing a manageable convertible finance facility, at a significant premium to our recent trading price, validating the value in the business. The combination of an affordable loan, robust and profitable production operations and an active drilling program, will allow LGO to quickly return to underlying growth," added Ritson.
By Adam Clark; adamclark@alliancenews.com
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