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Touchstone Explrtn. - ESCROW ARRANGEMENTS FOR US$20 MILLION TERM LOAN

RNS Number : 9980N
Touchstone Exploration Inc.
27 May 2020
 

 

TOUCHSTONE ENTERS INTO ESCROW ARRANGEMENTS FOR US$20 MILLION TERM LOAN

 

CALGARY, ALBERTA (May 27, 2020) - Touchstone Exploration Inc. ("Touchstone", "we", "our", "us" or the "Company") (TSX, LSE: TXP) announces that its indirect wholly-owned subsidiary, Touchstone Exploration (Trinidad) Ltd., has entered into escrow arrangements for a US$20 million, seven-year term loan agreement (the "Term Loan") with Republic Bank Limited, as initial lender, arranger and administrative agent. The Term Loan was arranged exclusively by the Corporate and Investment Banking Division of Republic Bank

 

The Term Loan is expected to become effective prior to June 15, 2020 once all conditions precedent have been met, which include the completion of security interest filings in Trinidad and Barbados and the receipt of regulatory approvals in Trinidad. A portion of the Term Loan proceeds will be used to repay the Company's C$20 million existing credit facility, with the remainder used for general corporate purposes.  

 

Material terms of the Term Loan are as follows:

 

·      Borrower

Touchstone Exploration (Trinidad) Ltd.

·      Facility type

Senior secured syndicated loan, with Republic Bank Limited acting as initial lender, arranger and administrative agent

·      Facility amount        

US$20 million

·      Term

Seven years from closing date

·      Fixed interest rate

7.85% per annum, payable quarterly in arrears

·      Principal amortization schedule

Principal moratorium for two years; thereafter twenty equal and consecutive quarterly principal repayments

·      Prepayments

Permitted after one year with a 1.0% penalty and a 30-day notice period, no penalties payable after three years

·      Collateral

Senior mortgage over fixed assets of the Borrower and its subsidiaries and corporate guarantee from Touchstone Exploration Inc.

·     Financial covenants (to be initially tested for the year ended December 31, 2022)

Net Senior Funded Debt to EBITDA less than 2.5 times

Net Senior Funded Debt to Book Value Equity less than 0.7 times

Debt Service Coverage Ratio greater than 2.5 times

·      Cash reserve balance

Maintain a balance of not less than the equivalent of two quarterly interest payments due

·      Fees

Underwriting fee of 0.75% of facility amount

 

Scott Budau, Chief Financial Officer, commented:

 

"We are pleased to be able to source local financing from Republic Bank, the largest lender in Trinidad and the Caribbean. The financial flexibility of the new facility will us allow to confidently proceed with our Ortoire exploration activities. In addition, the interest payable on the loan is expected to be tax deductible in Trinidad, equating to an after-tax cost of capital of 3.5%. We would also like to give our sincere thanks to Crown Capital, who has supported us since 2012."

 

Prior to the effective date of the Term Loan, Touchstone continues to operate under its existing C$20 million credit facility. In connection with the existing credit facility, the Company granted the lender a production payment equal to 1.33 percent of petroleum sales from Trinidad land holdings, payable quarterly through October 31, 2021. The parties have agreed not to buyout the production payment obligation and as such have entered into an amended production payment agreement to continue the obligation under the previous terms and conditions. The total payout of the existing credit facility will include the C$20 million principal balance, all accrued interest thereon, and a 1.0% prepayment fee.

 

Touchstone Exploration Inc.

 

Touchstone Exploration Inc. is a Calgary based company engaged in the business of acquiring interests in petroleum and natural gas rights and the exploration, development, production and sale of petroleum and natural gas. Touchstone is currently active in onshore properties located in the Republic of Trinidad and Tobago. The Company's common shares are traded on the Toronto Stock Exchange and the AIM market of the London Stock Exchange under the symbol "TXP".

 

For further information about Touchstone, please visit our website at www.touchstoneexploration.com or contact:

 

Touchstone Exploration Inc.

Mr. Paul Baay, President and Chief Executive Officer                                Tel: +1 (403) 750-4487

Mr. Scott Budau, Chief Financial Officer

 

Shore Capital (Nominated Advisor and Joint Broker)

Nominated Advisor: Edward Mansfield / Daniel Bush / Michael McGloin   Tel: +44 (0) 207 408 4090

Corporate Broking: Jerry Keen

 

Canaccord Genuity (Joint Broker) 

Adam James / Thomas Diehl                                                                      Tel: +44 (0) 207 523 8000

 

Camarco (Financial PR)

Nick Hennis / Billy Clegg                                                                             Tel: +44 (0) 203 781 8330

 

Advisories

 

Forward-Looking Statements

 

Certain information provided in this announcement may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking information in this announcement may include, but is not limited to, statements relating to the expected use of proceeds from the Term Loan and expected closing and timing of the Term Loan. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. Certain of these risks are set out in more detail in the Company's 2019 Annual Information Form dated March 25, 2020 which has been filed on SEDAR and can be accessed at www.sedar.com. The forward-looking statements contained in this announcement are made as of the date hereof, and except as may be required by applicable securities laws, the Company assumes no obligation to update publicly or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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Price: 99

Market: AIM
Market Cap: £182.32 m
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