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(Alliance News) - Sound Energy PLC said on Wednesday that it has secured a USD18 million loan note financing agreement with Afriquia Gaz SA.
Shares in Sound Energy were up 10% at 2.70 pence on Wednesday morning in London.
The loan comes as part of a 10-year deal for Afriquia Gaz to buy liquefied natural gas from Sound Energy. The agreement is for no fewer than 100 million cubic metres of gas per year and covers the phase one development at Sound Energy's Tendrara concession in Eastern Morocco.
The Morocco-focused gas developer said the secured loan note matures in December 2033 and that the fixed 6% per annum interest on the drawn principal of the loan will be payable quarterly but deferred and capitalised semi annually until the second anniversary of entry of the loan agreements.
Following this, principal and deferred interest will be repayable annually in equal instalments commencing 7 years from the date of execution of the loan agreements.
The loan, which is secured on the issued share capital of Sound Energy Meridja Ltd, will be available to be drawn down by Sound Energy in whole or in tranches over a three year period commencing last Friday.
The loan will be applied towards the development of the Tendrara production concession, Sound Energy added.
Conditions precedent to the loan include a project contract with Italfluid Geoenergy SRL for the provision of a gas processing and liquefaction facility relating to the phase one development.
Executive Chair Graham Lyon said: "We are delighted to have executed all loan note documentation which ensures that Sound Energy will be fully funded for its share of phase one development capital. This is a key milestone for the company and we will now move to issuing the notice to proceed to Italfluid and drawing down initial funding from the Afriquia Gaz loan in order to proceed with execution of the phase one development."
By Heather Rydings; heatherrydings@alliancenews.com
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