Petroleum Africa
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Sunday, February 12, 2017
TransGlobe Energy Corp.’s wholly owned subsidiary, TransGlobe Petroleum International (TPI), signed a $75 million crude oil prepayment agreement with Mercuria Energy Trading.
TPI’s obligations under the prepayment agreement will be guaranteed by the company and the subsidiaries of TPI (Guarantors). The obligations of TPI and the Guarantors will be supported by, among other things, a pledge of equity held by the company in TPI and a pledge of equity held by TPI in its subsidiaries.
This funding arrangement has a term of four years, maturing March 31, 2021 and advances bear interest at a substantially similar rate as the company’s outstanding convertible debentures at current Libor rates.
The funding arrangement is revolving with each advance to be satisfied through the delivery of crude oil to Mercuria. Further advances become available upon delivery of crude oil to Mercuria up to a maximum of $75 million and subject to compliance with the other terms and conditions of the pre-payment agreement. In conjunction with the prepayment agreement, TPI has also entered into a marketing contract with Mercuria to market nine million barrels of TP’’s Egypt entitlement production. The pricing of the crude oil sales will be based on indexed market prices at the time of sale.
The initial advance under the prepayment agreement will be used to refinance the 6.00% convertible debentures of the company maturing on March 31, 2017 and thereafter for working capital purposes of the company and its subsidiaries. The company expects to provide further details on the timing of the redemption of the convertible debentures prior to the end of February.
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