Bengal Energy amended its secured credit facility with the Australia-based Westpac Institutional Bank.

The amendment included a deferment of principal payments on the credit facility. The facility provides a borrowing base of $12.5 million, of which the full amount is currently drawn. Its expiry date of December 31, 2019 remains unchanged.

Under the amendment, the June 30, 2018 principal payment of $2.5 million was deferred and the December 30, 2018 principal payment reduced to from $2.5 million to $1.5 million. The amendment also requires Bengal to make a principal payment of $5 million on June 30, 2019 and a principal payment of $6 million on December 31, 2019. There were also minor revisions to the definitions of debt service coverage ratio and cash available for debt service.

A new cash sharing arrangement was included in the amendment, requiring Bengal to prepay an amount that in aggregate equals 50% of free cash received by the company in the preceding six months. The cash sharing calculation and payment will be done quarterly and will be credited to any outstanding loan amount under the credit facility. Between March 2018 and April 2019, any amounts posted to the cash sharing arrangement can be withdrawn by Bengal for any necessary corporate purposes so long as the company is in compliance with the terms of the facility. After April 30, 2019, if the credit facility has not been cancelled or repaid in full, Bengal must prepay such amounts as necessary to ensure that 100% of the free cash over the previous six month period ending on April 30, 2019 has been prepaid. These payments will not be available for withdrawal under the amended facility.

“This extension demonstrates the strong support from our lenders at Westpac and delivers additional value to our shareholders,” said Chayan Chakrabarty, Bengal’s president and CEO. “The financial flexibility afforded by the extension provides additional liquidity to evaluate near term development and exploration opportunities.”

Canada-based Bengal Energy is an international junior oil and gas exploration and production company with assets in Australia.