Energold Drilling entered into a binding term sheet with Extract Advisors, a New York and Toronto-based natural resources investment fund manager, for a $20 million secured convertible loan.
Extract, through funds it manages, has agreed to finance $15 million of principal amount of the loan. The balance will be provided by a syndicate of lenders to include existing debenture holders, new investors and insiders of the company, who have agreed to finance $2.25 million of the loan.
Energold intends to use the proceeds to repay its current loans, including $13.5 million of secured convertible debenture, due July 2017, as well as credit facilities with Royal Bank and Export Development Canada.
The loan will have a term of 60 months, provided that 75% of the outstanding principal amount will be repaid within 36 months, will carry an interest rate of U.S. LIBOR plus 750 basis points, increasing to LIBOR plus 1,100 basis points during the last 24 months of the term and with LIBOR to have a floor of 200 basis points, payable monthly.
The loan will be convertible into common shares of the company, in whole or in part, at the sole discretion of the lenders, at a conversion price of 85 cents per share.
Energold agreed to provide perfected senior, first ranking security interest in all assets of the company with the exception of those assets already in place to secure certain loans and lease commitments. Closing of the financing is expected on or before March 31, 2017.
Energold Drilling is a global specialty drilling company that services the mining, energy, water, infrastructure and manufacturing sectors in approximately 25 countries.