Daily News: June 9, 2016

Alberta Treasury Leads $50MM Gear Facility to Support Striker Acquisition


Gear Energy and Striker Exploration entered into a definitive agreement providing for the acquisition by Gear of all the issued and outstanding common shares of Striker.

In addition, Gear has entered into an agreement for a $15 million bought deal financing and has received a term sheet for a pro forma $50 million senior secured revolving credit facility to be provided on closing of the arrangement.

The bought deal financing is not subject to the completion of the arrangement. In addition, the board of directors of Gear has approved an increase in the capital budget to $12.5 million for 2016 conditional upon completion of the arrangement.

Gear entered into the term sheet with Alberta Treasury Branches on behalf of a syndicate of lenders in respect to the new credit agreement. The term sheet contemplates that the credit agreement will provide Gear with new $50 million senior secured revolving credit facilities, consisting of a $42.5 million syndicated credit facility and a $7.5 million operating credit facility.

The credit facilities are expected to be available on a fully revolving basis until May 31, 2017. The borrowing base under the credit facilities will be subject to a semi-annual borrowing base review. The new credit facilities are expected to be available following closing of the arrangement to finance Gear’s ongoing capital expenditures and for general corporate purposes. Concurrently with closing of the arrangement, it is anticipated that both Gear’s existing credit facilities and Striker’s existing credit facilities will be repaid in full and terminated.