Xcite Energy (XEL.L) announced the successful placing of $140 million through the placing of senior secured bonds issued by its 100% UK subsidiary Xcite Energy Resources Limited or "XER" and a private placement of shares in the Company to new investors.
The company stated that it will use net proceeds from the bond issue and the private placement of Shares to refinance the $80 million, 12.5% unsecured loan notes, due 25 December 2014 plus accrued interest and related obligations, to service interest payments under the Bonds, to fund the Bentley field development work programme through this year, prior to submission of the field development plan, and for general corporate purposes.
The Bonds have a term of two years and a cash interest coupon of 12% p.a., payable quarterly in arrears. In addition, the Bonds have a 3% p.a. payment in kind or "PIK" interest coupon accruing and compounding annually, which can be paid through the issuance of additional Bonds or in cash at XER's discretion. The Bonds will be issued at 90% of the face value and subscribers for the Bonds have also subscribed for 11.62 million Shares , at a price of 68.5 pence per Share, being the closing price of the Shares on AIM on Friday, 13 June 2014, and being an amount equal to the remaining 10% of the face value of the Bonds.
In addition, a subscriber in the Bond Issue has subscribed for an additional 4.30 million Shares at a price of 68.5 pence per share for gross proceeds of $5 million, to provide an aggregate gross proceeds from the Bond Issue and the Share Issue of $140 million.
The settlement date for the Bonds is expected to be 30 June 2014. The Bond is callable at the option of XER at any time with a call option premium during the first year after the Settlement Date comprising the present value on the relevant record date of 106.5% of par value; plus the present value of the remaining coupon payments (less any accrued interest) for the first year after the Settlement Date and accrued interest on the redeemed Bonds. During the second year after the Settlement Date, the call option premium comprises 106.5% of par value and any accrued interest on the redeemed Bonds.
The Bonds are secured over the assets of XER, including its interest in the Bentley field, as well as through the provision of a guarantee from the Company. As part of the issuance of the Bonds, XER will cancel its existing reserves based lending facility or "RBL" which was based on the Bentley field development plan in place prior to the pre-production well test in 2012. The use of an RBL facility that would be applicable for the current field development plan remains part of the Company's financing options for the future.
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