Xcite Energy has announced the successful placing of US$140 million through the placing of senior secured bonds (the “Bonds”) issued by its 100% UK subsidiary Xcite Energy Resources Limited ( “XER”) and a private placement of shares in the Company (the “Shares”) to new investors.
The net proceeds from the bond issue (the “Bond Issue”) and the private placement of Shares (the “Share Issue”) will be used to refinance the US$ 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 (“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 11,616,875 Shares (the “Subscription 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 4,302,546 Shares (the “Placed Shares”) at a price of 68.5 pence per share for gross proceeds of US$ 5 million, to provide an aggregate gross proceeds from the Bond Issue and the Share Issue of US$ 140 million.
The settlement date for the Bonds is expected to be 30 June 2014 (the “Settlement Date”). 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 (“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.
Rupert Cole, CEO of Xcite Energy commented: “This new financing package comes at an important time for the Company as we focus on delivering a technically and financially compliant field development plan for Bentley. It provides us with a stable platform to continue our planned activities this year, allowing us to further optimise the development plan and work towards completing contract negotiations with our partners. The planned work programme will also provide a greater level of cost and schedule definition, enabling us to develop the longer term financing needed for the first phase development of the field, for which we shall continue to evaluate a number of options including asset financing, reserves based lending and additional development partners.”