Cloudbreak Regulatory News (CDL)

2 Dec 2005 07:00

Cardinal Resources plc01 December 2005 CARDINAL RESOURCES PLC ANNOUNCES NEW FINANCING FACILITIES; SETTLES RUDIS ACQUISITION DEFERRED PAYMENT LONDON - Thursday, 1st December 2005ContactKate Spiro Cardinal Resources plc (AIM:CDL), an independent oil andDIRECTOR gas exploration and production company, today announcesInvestor Relations that it has secured a US$8 million bridge financingkspiro@cardinal-uk.com facility from Silver Point Finance to fully satisfy the+44 (0) 20 7936 5258 Rudis acquisition deferred cash consideration, for transaction expenses and general corporate purposes. Cardinal is also in advanced discussions with Silver Point to increase the bridge financing to US$38 million. This will enable Cardinal to refinance the initial US$8 million and to also take advantage of several significant development opportunities. Specifically, the additional facility would allow Cardinal to: • exercise its previously-disclosed right to increase its net profit interest in the Rudivsko-Chernovozavodske (RC) Field from 14.9% to 45% (the RC Buy-Back) on terms to be agreed by Cardinal and its local joint venture partner, JSC Ukrnafta. For such negotiations to commence Cardinal needs to have committed financing in place; • expand its work programme to include development of the recently-acquired Rudis assets; and • finance additional farm-in and acquisition opportunities available to Cardinal in Ukraine. Cardinal expects that when it completes the RC Buy-Back and the current development drilling activities and workovers it will benefit from significantly increased reserves, increased oil and gas production and an increasing oil and gas price environment in Ukraine. "This financing is the first step in moving forward with a financial partner that can assist Cardinal in its strategy of growth through acquisitions in Ukraine," said Robert J Bensh, Chairman and Chief Executive Officer of Cardinal. Summary Terms of Financing Agreement Under the completed financing agreement with Silver Point, Cardinal has issued US$8 million in PIK Notes to Silver Point. The PIK Notes will carry a coupon of 15% with quarterly interest payable in cash or by issue of further PIK Notes (on the same terms) at Cardinal's option. As part of this financing, Cardinal has also issued to Silver Point warrants to subscribe at a price of 27.5p for 4,389,875 new Cardinal ordinary shares for a period of 5 years. The subscription price represents a premium of 49% over the mid-market closing price of Cardinal shares on 1st December 2005. The PIK Notes will have a 6 month term and, based on advanced discussions with Silver Point, the expectation of the Directors of Cardinal is that the PIK Notes will be refinanced by an issue of new Bridge PIK Notes in the amount of US$38 million. The terms, subject to final due diligence and satisfactory documentation, would be similar to those for the US$8 million bridge, with the exception of a 2 year term, and are intended to be refinanced, subject to shareholder approval, by an issue of Senior PIK Notes before expiry of the term. If the Senior PIK Notes are not issued, interest payments will rise from 15% to 20% per annum six months after the Bridge PIK Notes' issue date and then another 1% per annum for every quarter thereafter until maturity. A break up fee of US$3.5 million would become payable to Silver Point if Cardinal were to refinance the US$8 million PIK Notes within 90 days of the date hereof with an alternative party. No break up fee will be payable if Silver Point withdraws, or if Silver Point and Cardinal fail to agree terms. Cardinal Resources plc Cardinal Resources plc is an independent oil and gas exploration and production company with assets in Ukraine. Cardinal is an experienced operator in the country focused on expanding its existing operations through the farm-in or acquisition of additional upstream oil and gas assets that can be further developed through the application of modern technology and expertise. Silver Point Finance Silver Point Finance structures and provides custom financing for large and middle market companies across all industries. ### This release may contain certain forward-looking statements. These statements relate to future events or future performance and reflect management's expectations regarding Cardinal's growth, results of operations, performance and business prospects and opportunities. Such forward-looking statements reflect management's current beliefs, are based on information currently available to management and are based on reasonable assumptions as of this date. No assurance, however, can be given that the expectations will be achieved. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release. While Cardinal makes these forward-looking statements in good faith, neither Cardinal, nor its directors and management, can guarantee that the anticipated future results will be achieved. This information is provided by RNS The company news service from the London Stock Exchange