3rd Nov 2014 12:21
LONDON (Alliance News) - Sefton Resources Inc Monday said the decline in the price of oil has had an impact on the negotiations over an alternative borrowing facility, which is to be used to replace its current bank debt and to complete its Tapia joint venture transaction.
In a statement, Sefton said an alternative borrowing facility has been negotiated with a third party lender and due diligence is continuing with a view to closing by November 20.
"The recent decline in oil price has had an impact on the process, as the lower oil price deck used by lenders limits the potential borrowing base. Lower oil prices have also influenced potential equity investors to avoid commitment to the refinancing of debt due to the bank," Sefton said in a statement, adding that a definitive closing date has not yet been determined.
The company also said its October oil production was "moderately higher" than in September, though revenue was lower due to the decline in the selling price of its oil.
While Hawker and Sefton are continuing negotiations for financing, the company said neither it nor Hawker were able to make the full forbearance payment of USD120,000 plus interest of USD26,740.21 due to the bank on October 31.
Sefton said that Hawker was able to make a partial payment of USD50,000 on that day, to be "applied at the bank's sole discretion" and the bank provided a deferral of the balance due until November 20, unless the refinancing is completed before then.
"All other terms and conditions remain unchanged and the forbearance agreement with the bank remains in good standing. The USD50,000 will be added to the balance of the Subordinated Note due to Hawker," Sefton said.
"The company appreciates the willingness of the bank to provide the deferral as the company and Hawker work toward a refinancing of the loan," Sefton said.
In early October, Sefton said it had made a required USD120,000 forebearance payment to its lender, and got agreement on a delayed payment on the interest and fees owed.
In July, oil and gas explorer Sefton set up a forbearance agreement with Hawker, in which the subsidiary of Sara Creek Gold Corp would finance its ongoing field operations with the expansion of its previously announced loan to USD1.5 million from USD1.0 million.
The deal followed an announcement in June when 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.
Forebearance is an agreement between a lender and a borrower to delay foreclosure.
Sefton shares were Monday quoted down 20% at 0.100 pence.
By Samuel Agini; [email protected]; @samuelagini
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