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Madalena Energy Inc

Madalena Energy's fortunes transformed as Hispania Petroleum extends credit package

Job done. Chairman and interim CEO Steven Sharpe is moving on, with Hispania's CEO Jose David Penafiel taking over as chief executive officer.

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Hispania and Madalena have entered into a services agreement

Madalena Energy Inc's (CVE:MVN) shares shot up Monday morning as it secured credit facilities with privately owned Spanish energy company Hispania Petroleum.

The agreements provide for a package of debt and mezzanine financing that should. once implemented, resolve Madalena's liquidity issues at a stroke.

One credit facility, of US$6.5mln, will provide the company with working capital, and will accrue interest at 7% a year.

The other, for US$16.5mln, provides the company with access to growth capital for drilling and investment activities. It also carries an interest rate of 7% a year.

Jose David Penafiel, Hispania's chief executive officer (CEO), has been appointed CEO of Madalena.

He and Alejandro Augusto Penafiel will join Madalena's board of directors.

Hispania and Madalena have entered into a services agreement whereby Hispania's personnel, in Argentina and elsewhere, will be made available to Madalena.

Jose David Penafiel, Madalena's new CEO, has managed multiple drilling campaigns in Argentina, as well as unconventional drilling operations in Texas in the Permian Basin.

He brings to Madalena a long history working in the energy industry, with most of that experience focused in Latin America, Madalena noted.

“This transformative transaction provides Madalena with sophisticated leadership, financially aligned with shareholders and experienced in working in Argentina, and with committed growth capital,” Madalena's statement said.

“With leadership concentrated in Argentina, the company can implement cost controls and can achieve meaningful efficiencies. The growth capital will enable the company to properly develop its conventional and unconventional assets. In summary, this marks a new chapter for Madalena, with a renewed focus on operational productivity and enterprise growth,” it added.

Having secured the future of the company, chairman and interim CEO Steven Sharpe is grabbing his coat and quitting the board.

"My work here is done", Sharpe said.

"The challenges we have faced over the last while have been truly enormous, but I believe Madalena's future prospects are bright and its ability to pursue them assured. I have spent much time with Jose over the last months as we put this deal together. The company is in good hands," he opined.

Maglan Capital LP, Madalena's largest shareholder, thanked Sharpe and his colleagues for “consummating this transaction”.

Maglan pledged to work with the new CEO and board.

New CEO Jose David Penafiel said: “We are excited about the opportunity to focus on Argentina once again. Madalena has solid production from its existing fields, and holds significant exploitation potential with the ability to materially grow production through a clearly thought out near-term drilling and completion program in its core Vaca Muerta position.”

Madalena will release its first quarter results on Wednesday after the market closes.

Quick facts: Madalena Energy Inc

Price: $0.11

Market: TSX-V
Market Cap: $57.13 m
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