Gen III Oil received a term sheet from Export Development Canada (EDC), a financial Crown corporation, for a term loan for up to C$72 million ($55 million) to finance up to 50% of a base oil re-refinery in Bowden, Alberta.

The borrower of the facility will be the company’s subsidiary, Gen III Oil (Alberta), with the parent company guaranteeing the loan. No securities of the company, or Gen III Alberta, are contemplated to be issued in connection with the facility.

The term loan will be used to fund costs associated with the design, engineering, procurement, development, construction, commissioning and operational ramp-up of the Bowden project, including funding of a debt service reserve account, cost overrun account, interest payments, lender fees and expenses, professional fees and expenses, insurance premia, taxes, the cost of obtaining permits and other agreed upon costs and expenses incurred in connection with the project.

Closing of the facility is subject to various conditions, including the completion of satisfactory due diligence by the parties and execution and delivery of definitive loan documents.

Project capex is currently estimated at $119 million, including appropriate industry contingencies. The required equity is to be fully contributed prior to the first disbursement of the loan. To date, Gen III has contributed approximately $7 million to the Bowden project.

“We are extremely pleased with the level of support shown by EDC. We look forward to fulfilling the term sheet requirements and building a long-term relationship with the EDC,” said Mark Redcliffe, Gen III executive vice president. “Being able to secure an EDC term loan proposal at the project subsidiary level from a strong financial partner is a great outcome that will advance our Bowden site project, reduce the effects of shareholder dilution and provide a potential financial partner for future Gen III projects outside Canada.”