19th Feb 2015 10:59
LONDON (Alliance News) - Caza Oil and Gas Inc saw its shares drop on Thursday after it said it has secured a USD5 million facility under a convertible unsecured note agreement with YA Global Master SPV Ltd.
Caza Oil shares were down 16% to 7.00 pence per share on Thursday morning.
Caza said it has obtained a USD4 million loan as an initial tranche of a USD5 million facility from YA Global, and said it has immediately drawn down USD1 million of the initial tranche, with the expectation of drawing down USD3 million in the next month, it said.
The loan is being used for general operational costs, and Caza said the loan, which carries 8% annual interest, "represents the most cost effective and accessible form of financing in the current oil price environment."
In addition, once the company has drawn down the entire USD4 million tranche, it said it will sign an agreement with its existing debt provider, Apollo Investment Corp. The agreement will defer determination of finance and performance covenants under its USD50 million note purchase agreement with Apollo, to September 30, 2015 from the original date of March 31, 2015.
"This deferral will provide the company with added flexibility in determining its allocation of capital resources during this period of low oil prices," said Caza.
"The financing benefits Caza by providing additional capital and optionality at this time, particularly with the approval from Apollo to extend covenant determinations until the end of the third quarter," said Chief Executive Michael Ford.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
CAZA.L