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CGX pledges Guyana assets for US$19M loan
…money to finance drill campaign, works on deepwater harbour
Kaieteur News – Canadian oil exploration company, CGX Inc., on Friday announced that it has secured a US$19M loan from its joint venture partner offshore Guyana.
The loan, according to the partners, is meant to finance CGX’s share of costs related to the development of its Corentyne, Demerara and Berbice oil blocks, its Berbice deepwater port project, and other budgeted spending for the year.
CGX Chairman, Professor Suresh Narine
The agreement with Frontera dictates that the loan to CGX will be available for drawdown in tranches on a non-revolving basis until October 31, 2021 or the date on which CGX enters, or its subsidiaries enter, into a binding transaction that provides funds to repay the amounts outstanding under the loan.
It was noted by the joint venture partners that the loan, together with all interest accrued, shall be due and payable on June 30, 2022, or such later date as determined by Frontera, at its sole discretion. Interest payable on the principal amount outstanding shall accrue at a rate of 9.7 percent annually, payable monthly in cash, with interest on overdue interest. Additionally, under the loan agreement, if the loan is extended by Frontera past June 30, 2022, at its sole discretion, the new interest rate will be 15 percent per annum.
The loan, according to the partners “will be secured by all the assets of CGX.” The loan agreement also includes a standby fee of 2% multiplied by the daily average amount of unused commitment under the loan payable quarterly in arrears by CGX during the drawdown period.
It was noted too, that subject to the requisite approvals, Frontera in its sole discretion, may elect to convert all or a portion of the principal amount of the loan into common shares in the capital of CGX at the conversion price per common share. The maximum number of common shares which may be acquired by Frontera upon the conversion of the loan, is 26,685,393 common shares, which represents approximately 9.28% of the currently issued and outstanding common shares of CGX. The loan remains subject to customary conditions, including the negotiation and execution of definitive agreements between Frontera and CGX and obtaining regulatory approvals.
Chief Executive Officer of Frontera, Orlando Cabrales, in making the joint announcement noted, “Our joint venture with CGX represents a significant growth opportunity for both companies and is rooted in a commitment to the Guyanese government to develop these world class assets with a focus on local engagement and the development of infrastructure. Completing the loan agreement with CGX is an important step forward and the Joint Venture remains firmly on-track to spud its first offshore Guyana well as planned in the second half of this year.”
Executive Co-Chairman of CGX, Professor Suresh Narine, in his remarks said, “These are exciting times for CGX, the Joint Venture and our stakeholders as we get closer to spudding Kawa-1.”
He said, “we have exciting exploration plans for the Kawa-1 and Makarapan-1 wells on the Corentyne and Demerara Blocks and, as importantly, we are developing the infrastructure necessary to support and enhance broader energy and trade industry activity through the Berbice Deepwater Port Project.”
According to Professor Narine, the companies are looking forward to executing on their programs and creating value and opportunity for stakeholders.
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