Credit Suisse Leads $265MM Facility for Canacol Energy
Canacol Energy entered into a credit agreement for a $265 million senior secured term loan with a syndicate of banks led by Credit Suisse as sole lead arranger and sole bookrunner, and including mandated lead arrangers Export Development Canada, Davivienda, Citibank, Banco Internacional de Costa Rica, Banco Latinoamericano de Comercio Exterior, BHD International Bank and Bancaribe.
The new credit agreement will replace the corporation’s existing two facilities with BNP Paribas and Apollo Investment Corporation Senior Notes and will offer the following benefits:
- Defer amortization payments until March, 2019, allowing the corporation to dedicate capital to high netback production related projects instead of debt service
- Reduce the total annual interest costs as compared to the combined BNP Facility and Apollo notes by approximately 1.1%
- Harmonizes compliance and administrative deliverables under one facility
Although the corporation’s currently contemplated 2017 capital budget lies within its 2017 cash flow and existing cash, the new credit agreement will also allow an additional $40 million of Greenshoe funds available within 12 months post funding. This provides Canacol with increased financial flexibility as it pursues its stated gas production goal of 230 mmscf/d by late 2018.
This option is at the discretion of the corporation and on the same terms and conditions of the initial funding. The term loan will mature on March 20, 2022, with interest payable quarterly and principal repayable in 13 equal quarterly instalments starting March 20, 2019, following more than two years of initial grace period. The term loan will carry interest at LIBOR plus 5.5% and will be secured by all of the material assets of the corporation. Proceeds from the term loan will be used for repayment of principal in the amount of $255 million.
Canacol’s CFO, Jason Bednar, commented. “For all the reasons stated above, this is a very important piece of business for Canacol as we work toward our goal of 230 mmscf/d of gas production by late 2018, most importantly, aligning the first term payment of the new facility with greatly increased gas production by 2019.”
Alberta-based Canacol is an exploration and production company with operations focused in Colombia and Ecuador.