Canacol Energy Secures $75 Million Loan to Enhance Operations
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Canacol Energy Ltd. Secures a $75 Million Term Loan
CALGARY, Alberta - Canacol Energy Ltd. (“Canacol” or the “Corporation”) (TSX: CNE; OTCQX: CNNEF; BVC: CNEC) has just completed an exciting new chapter in its financial strategy by announcing a $75 million senior secured term loan facility with Macquarie Group.
Details of the Loan Facility
This new facility is a committed 24-month loan, designed to provide immediate financial flexibility. The first drawdown is set at $50 million, with an additional $25 million available depending on the achievement of specific production metrics over the next twelve months. The annual interest rates include SOFR + 8.0% for drawn amounts and a more attractive 2.4% for undrawn funds during the commitment period.
The loan is structured to favor the Corporation, offering a twelve-month principal payment grace period wherein no prepayments can be made. This strategic design allows Canacol to strengthen its balance sheet and align with its ongoing operational priorities. The Facility matures on September 3, 2026, securing all material assets owned by the Corporation.
Harmonized Covenants for Financial Stability
An important aspect of this arrangement includes covenants that are closely aligned with Canacol's existing obligations, particularly those tied to its 2028 senior unsecured notes and a senior unsecured revolving credit facility due in February 2027. By harmonizing these requirements, Canacol enhances its financial predictability during this essential growth phase.
As of June 30, 2024, the Corporation reported $43 million in cash, demonstrating strong positioning with a leverage ratio of 2.69x. This figure is significantly below existing covenants which stand at 3.25x (incurrence) and 3.5x (maintenance), indicating robust fiscal health.
Utilization of Loan Proceeds
Canacol plans to utilize the funds from this loan facility for general corporate purposes, ensuring operational continuity and supporting ongoing projects in natural gas exploration and production.
Incentives for Macquarie Group
As part of the arrangement, Macquarie Group will receive 1,888,448 common share purchase warrants. Each warrant permits Macquarie to purchase a common share of the Corporation at a price determined by the five-day volume-weighted average trading price as of the announcement date. These warrants are slated to expire three years post-issuance and will require final approval from the Toronto Stock Exchange.
Gas Sales Performance Update
Canacol has also released its gas sales performance, showing a steady production average of approximately 161 million standard cubic feet per day (MMscfpd) in July and an increase to 167 MMscfpd in August 2024. This growth trajectory is poised to further support the Corporation's financial and operational objectives.
About Canacol Energy Ltd.
Canacol is a major player in the natural gas exploration and production sector, primarily focused on developments in Colombia. The Corporation is listed on prominent stock exchanges including the Toronto Stock Exchange under the ticker CNE, alongside the OTCQX in the U.S. markets as CNNEF, and in Colombia as CNEC.
Frequently Asked Questions
What is the main purpose of the loan facility?
The loan will be used for general corporate purposes to strengthen Canacol's operational capabilities and provide financial flexibility.
How much is the total loan amount secured by Canacol?
The total loan amount secured is $75 million, which includes an initial draw of $50 million.
What is the maturity date of the loan?
The loan facility matures on September 3, 2026, with a twelve-month grace period for principal payments.
Who is Macquarie Group?
Macquarie Group is a global financial services provider that Canacol is collaborating with to secure this term loan facility.
What was Canacol's gas sales performance in recent months?
Canacol reported average gas sales of approximately 161 MMscfpd in July 2024, increasing to about 167 MMscfpd in August 2024.
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