Hemisphere arranges $35-million (U.S.) loan facility
HEMISPHERE ENERGY Corp. has entered into a new and significantly increased credit facility with Cibolo Energy Partners LP (and certain of its affiliates), a Houstonbased firm focused on energy investment opportunities. The new credit facility is a strategic and transformational transaction for Hemisphere that will allow the company to accelerate the development of its Southern Alberta Atlee Buffalo water flood oil assets. Consequently, the company has repaid and terminated its existing credit facility with its Canadian bank.
New credit facility Hemisphere has entered into a first-lien senior secured credit agreement with Cibolo providing for a multidraw, non-revolving term loan facility of a maximum total principal amount of up to $35.0-million (U.S.), with an initial commitment amount of $15.0-million (U.S.) . This represents an approximate 50-per-cent increase in currently available credit to Hemisphere as compared with its former credit facility. Hemisphere has made an initial draw of $10.0-million (U.S.) of the initial $15.0-million (U.S.) commitment under the new credit facility. Additional commitments are subject to further approval by Cibolo. The interest rate for the new credit facility is the three-month U.S.-dollar London interbank offered rate (LIBOR) with a LIBOR floor of 1 per cent, plus 7.50 per cent payable quarterly, for a five-year term with a maturity date of Sept. 15, 2022.
The new credit facility has been used to fully repay the outstanding indebtedness under the former credit facility and will also be used to greatly expand the company’s development in the Atlee Buffalo area. Hemisphere’s board of directors and Cibolo have approved a development plan under which Hemisphere intends to make capital expenditures of up to $7.6-million in the rest of 2017. These expenditures include plans to drill seven additional wells in Atlee Buffalo, expand its F pool facility, and construct a
new water separation and reinjection facility in the G pool. This will allow the company to drill in an area of unattributed reserves in the F pool, optimize and increase production capability in the G pool, expand its fieldwide reservoir simulation, and set up for an aggressive 2018 drilling program.
In conjunction with the new credit facility, the company has issued 13.75 million warrants to Cibolo. Each warrant entitles Cibolo to purchase one common share of Hemisphere at an exercise price of 28 cents prior to Sept. 15, 2022. This exercise price represents a 40-per-cent premium to the 30-day volume-weighted average price of Hemisphere’s common shares at market close on Sept. 14, 2017.
Prior to the provision of the new credit facility, Cibolo did not own any securities of the company. Assuming the exercise of all of the warrants issued in conjunction with the new credit facility, Cibolo would own approximately 15 per cent of the outstanding common shares of the company.
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Karen Baxter condensed this news release (email@example.com).
Frank Stephen Borowicz, Bruce Gregor McIntyre, Charles Noel O’Sullivan, Don Simmons, Gregg Kingsley Vernon, Richard Maclennan Wyman
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