Ithaca Energy extends bank financing facilities, removes covenants

Ithaca Energy has extended and simplified its bank debt financing facilities totaling $650m.This has provided Ithaca with funding headroom ahead of first hydrocarbons from the Greater Stella Area in the second quarter of 2016. The $650m in facilities consists of a senior reserve based lending facility of $575m and a junior facility of $75m, both of which were extended until September 2018.Including $300m senior unsecured notes due July 2019, Ithaca has total debt funding capacity of $950m.Graham Forbes, Chief Financial Officer said, "The facilities are 'right sized' for our needs as we begin the process of de-leveraging the business following completion of all offshore drilling operations prior to Stella first oil and receipt of the proceeds from the sale of the Norwegian business expected in Q3-2015."Significantly, the decision to replace the former corporate facility with a junior reserve based lending (RBL) facility means there are no longer historic financial covenant tests attached to the debt facilities. That ensures that its ability to finance itself through the use of debt will depend on the future value of the company's assets.The exploration outfit forecast that its peak debt requirement prior to Stella start-up would reach $825-850m in the second quarter of 2015, resulting in headroom of over $100m.According to analysts at Westhouse Securities the extension and simplification is good for Ithaca Energy. Stella should be onstream in Q2 2016 and with capex tailing off rapidly in H2 2015. The analysts predicted that free cash-flow should then be above $20m in the second half of 2015.The broker retained its buy recommendation and 80p target price.As of 15:33 shares in the company were higher by 4.08% to $1.02 in Toronto trading.