CGX is pledging Guyana’s assets for a US $ 19M loan
… Money to fund a drilling operation, working on a deepwater harbor
Kaieteur News – Breathable oil exploration company CGX Inc. announced Friday that it has secured a US $ 19M loan from its offshore joint venture partner Guyana.
The loan, according to the partners, is supposed to fund CGX’s share of costs associated with developing its Corentyne, Demerara and Berbice oil blocks, its Berbice deepwater port project, and other budgeted spending for the year .
Chair of CGX, Professor Suresh Narine
The agreement with Frontera requires that the loan to CGX be available to be drawn down in shares on a non-recurring basis until October 31, 2021 or the date that CGX commits, or submits, companies to enter into, a binding transaction that provides money to repay the amounts due under the loan.
The joint venture partners stated that the loan, together with all accrued interest, will become due and payable on June 30, 2022, or any later date set by Frontera, in its absolute discretion. Interest payable on the principal amount due will accrue at the rate of 9.7 per cent annually, payable monthly in cash, with interest on overdue interest. In addition, under the loan agreement, if the loan is extended by Frontera after June 30, 2022, at its absolute discretion, the new interest rate will be 15 percent per year.
According to the partners, the loan will be “secured by all CGX assets.” The loan agreement also includes a 2% contingency fee multiplied by the unused daily average amount of the unused loan commitment payable quarterly in arrears by CGX during the drawdown period.
It was also noted that, subject to the required approvals, Frontera may in its absolute discretion, elect to convert all or a portion of the principal amount of the loan into ordinary shares in the CGX capital at the conversion price per ordinary share. The maximum amount of ordinary shares that Frontera can acquire after converting the loan, is 26,685,393 ordinary shares, representing approximately 9.28% of the CGX ordinary shares issued and currently outstanding. The loan remains subject to customary conditions, including negotiation and implementation of definitive agreements between Frontera and CGX and obtaining regulatory approvals.
Commenting on the joint announcement, Frontera CEO Orlando Cabrales stated, “Our joint venture with CGX represents a significant growth opportunity for both companies and is rooted in a commitment to the Guyanese government to develop.” These assets are world class with a focus on local engagement and infrastructure development. Completing the loan agreement with CGX is an important step forward and the Joint Venture remains on track to plunder its first offshore Guyana well as planned in the second half of this year. “
CGX Executive Co-Chair Professor Suresh Narine said in his remarks, “These are exciting times for CGX, the Joint Venture and our stakeholders as we approach Kawa-1 raiding.”
He said, “we have exciting exploration plans for Kawa-1 and Makarapan-1 wells on the Corentyne and Demerara Blocks and, just as importantly, we are developing the infrastructure necessary to support and enhance the activity of the wider energy and trade industry through Berbice Deep Water. Port Project. ”
According to Professor Narine, the companies look forward to acting on their programs and creating value and opportunity for stakeholders.