RE: ZENITH FANTASTIC MEDIA COVERAGE19 May 2020 18:15
How will Zenith service the 12.5 million loan which has been novated from AAOG Congo to Zenith Energy? Or have I read this wrong? Zenith can of course subsequently offset any interest payments as being deductible, but they still have to pay it no?
I noted that part of the overall transaction was that Zenith would need to obtain regulatory approval from TSX, however, de-listing from TSX has removed this hurdle? Interesting move? Financial reasons as stated or avoidance of anticipated TSX approval problems? who knows really..
Zenith are supposed to be committing, therefore presumably need proof of their ability, to fund a $5.5m work program for Tilapia, also they need to pay the brown envelope or 'signature bonus' capped at $2m (if they pay in one lump sum), or a higher figure if they need to pay over time.
They will need to confirm those appointments for in-country negotiators that were mentioned back in Jan or Feb, and they will have to set up an operational base. Realistically and to give them some headroom on finance they need $10m to get going in Congo alone. Repayment of any monies to Zen is likely to be conditional upon Zen tipping their own money in and after some success has been achieved in getting to the oil ( so that's a never then in real terms)
If I read it correctly about the 12.5 debt, plus the funds required for each of the other projects, Italy, Africa, etc, Zen need oohh-err, a lot of cash. They could drip feed payments on the debt, but it would sit on the balance sheet until they managed to get full throttle on oil production upwards of 3000bbls a day or some such figure and then pay it down.
Seems to me that the investment case here now is extremely high risk compared to the initial model of slow but sure small incremental production increases from a hundred or so wells spread across the biggest ahem oil field in Azerbaijan when the POO was double and the production to Zen was 350bbls a day and there were about 120m shares in issue and cash in the bank.
Someone needs to take up those 25m bonds at a 10% coupon that come with no guarantees of repayment.
Still no news on the promised review of corporate overheads and salaries.
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