Saturn Oil & Gas entered into a $20 million senior secured revolving note facility with Prudential Capital Energy Partners, the middle-market energy mezzanine fund business sponsored by Prudential Capital Group. Under the terms of the notes, Saturn has elected and qualified for an initial issuance of notes equal to approximately $4.6 million. The remaining balance of notes issuable under the facility is subject to Saturn’s satisfaction of applicable terms and conditions thereunder.

The notes offer a combined average coupon rate of approximately 15% per year, payable monthly in arrears, and will mature on September 14, 2022. Saturn may, at its option, elect to satisfy up to 2% of the coupon interest of the notes by way of issuance PIK notes, which notes shall be substantially similar to the notes in all material respects.

The company has also agreed to issue Prudential Capital warrants to purchase 30,505,122 common shares of the company. The warrants are exercisable at a price per common share of $0.235, which is equivalent to the closing price of the company’s common shares on the TSX Venture Exchange on September 13, 2018.

Saturn intends to use the majority of the net proceeds from the issuance of the notes to rapidly expand their development of their Viking light oil and Success heavy oil assets in west-central Saskatchewan. In addition, a portion of the net proceeds of the initial Note issuance will be used to retire certain of the company’s existing and higher interest debt.

John Jeffrey, CEO of Saturn, said, “We would like to thank Prudential, our new lending partner, for their commitment and support. This financing provides us the instrument to aggressively develop our light and heavy oil assets while continuing to strengthen our asset base.”

Prudential Capital Group is the $81.4 billion private capital arm of PGIM, the $1 trillion global investment management businesses of Prudential Financial.