16th Jul 2014 10:10
LONDON (Alliance News) - Sefton Resources Inc Wednesday said a new forbearance agreement has been executed by Hawker Energy LLC, a subsidiary of Sara Creek Gold Corp, and Sefton on July 15, helping the company to deal with its financing woes.
The oil and gas explorer, with operations in California and Kansas said that Hawker continues to finance its ongoing field operations with the expansion of its previously announced loan to USD1.5 million from USD1.0 million.
The company has had a disastrous year, swinging to a pretax loss in 2013 as increases in revenue were hit by significant impairment charges and higher general and administrative expenses following a case against the bloggers Tom Winnifrith and Dan Levi during the period.
The litigation, which was settled outside of court, led to the stepping down of Sefton's Chief Executive Jim Ellerton and an internal investigation during 2013.
The company brought the libel case against Winnifrith and Levi after they alleged Fox Davies Capital resigned as Sefton's advisers because it felt the company was misleading investors.
At the end of June, Sefton said that its bank agreed to an extension of final repayments until December 28, as long as Sefton made an immediate payment of USD360,000, monthly payments of USD100,000 plus interest at 8% beginning July 31 and payments of legal fees of USD20,000 per month during the forbearance period.
In a statement in May, Sefton Resources said it had entered into a letter of intent with a private US-based energy company, without naming the company, which it said will provide it with interim working capital, but will also see the funder acquire a 80% stake in its operating subsidiary in California, TEG USA, which holds the Tapia field.
In June, Sefton said the inter-creditor agreement allows Hawker Energy to advance additional subordinated loans to Sefton Resources in two instalments, which will fund up to two 30 day extensions of the existing borrowing facilities with its bank.
It said the extension payments advanced to the group by Hawker Energy will be paid to the bank in settlement first of accrued interest, and then to reduce the principal amount of the existing borrowing facilities.
The company also said on Wednesday that the cyclic stream programme in the Tapia field has now been reactivated and is continuing to yield results, ahead of passing over a majority stake in the site to Hawker, pending shareholder agreement at an upcoming meeting.
Sefton Resources shares were down 16.1% to 0.130 pence, putting it in the top five AIM All-Share fallers on Wednesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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