Loan Agreement with Infrastrata plc

RNS Number : 4893T

Baron Oil PLC

06 January 2017

 

6 January 2017

Baron Oil plc

Loan Agreement with Infrastrata plc

The Board of Baron Oil plc ("Baron" or "the Company"), the independent oil and gas exploration and production company, is pleased to announce that it has signed a Loan Facility Agreement ("Agreement") with InfraStrata plc ("InfraStrata") with respect to the Islandmagee gas storage project ("Islandmagee") in Northern Ireland.

Under the terms of the Agreement, Baron is providing a loan of up to £300,000 to InfraStrata, secured primarily against InfraStrata's 90% interest in Islandmagee. The loan will specifically provide bridge working capital for the next development phase of Islandmagee.

The loan is for a term of 12 months from the date of the Agreement. Baron is entitled, acting in its sole discretion, to extend the term of the Agreement by an additional 12 months. The loan will convert to an on-demand facility, repayable at any time following Baron's demand, with effect from 30 April 2017 in the event that InfraStrata has not secured further funding by that date required to complete the Front End Engineering and Design (FEED) for Islandmagee. The Loan is subject to an interest rate of 6% of the funds drawn down, which is payable monthly in advance (rising to 9% in a payment default situation).

Baron will also receive an additional £200,000 (the "Additional Payment") in the event of a sale or disposal by InfraStrata of substantially all of its assets, which now comprise its interest in the Project, and/or a change in control of InfraStrata within two years from the entering into of the Agreement.  In the event of a partial disposal of InfraStrata's interest in the Project (whereby InfraStrata retains control of Islandmagee Storage Limited ("IMSL"), the company through which it holds its 90% interest in the Project) the Additional Payment will be reduced to £100,000, with the remaining £100,000 payable in the event of a subsequent disposal or change in control of InfraStrata during the two years. The Additional Payment is payable in the above scenarios regardless of whether the Loan has been repaid during this period or is still in use. 

The loan is secured by, inter alia: (i) a first-ranking debenture over the undertakings and assets of InfraStrata UK Limited ("InfraStrata UK"), the wholly owned subsidiary of InfraStrata, which owns 90% of IMSL; and (ii) charges over shares in InfraStrata UK (granted by the Company) and IMSL (granted by InfraStrata UK). The Loan can be repaid by InfraStrata in full at any time during its term, which would lead to the release of the security arrangements.

The terms of the Agreement contain a number of customary representations and warranties, information undertakings, and general covenants, which include a negative pledge restricting InfraStrata and InfraStrata UK's ability to grant further security over their assets. The terms of the Agreement also impose certain obligations and restrictions on InfraStrata and InfraStrata UK, including, inter alia, restrictions on acquisitions and joint ventures, further borrowing and guarantees. The Agreement contains a number of events of default, which includes, inter alia, the suspension or cancellation of trading of the Company's ordinary shares on AIM, subject to a seven-day remedy period.

Malcolm Butler, CEO of Baron, commented: "We continue to believe in the viability of Islandmagee, particularly in view of the current problems being experienced by the UK's main gas storage facility at Rough Field, and are therefore prepared to work with InfraStrata to keep the project on track."

For further information on the Company, visit www.baronoilplc.com or contact:

Baron Oil Plc:

Malcolm Butler (CEO)                                                            Tel: [phone]

Cantor Fitzgerald (Nominated Advisor and Broker):

Sarah Wharry (Corporate Finance)                                        Tel: [phone]

Alex Pollen (Corporate Broking)

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

 

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