Canacol Energy Ltd. Secures $75 Million Term Loan
CALGARY, Alberta - Canacol Energy Ltd. (“Canacol” or the “Corporation”) (TSX: CNE; OTCQX: CNNEF; BVC: CNEC) has embarked on an exciting new phase in its financial strategy by announcing a $75 million senior secured term loan facility with Macquarie Group.
Loan Facility Details
This facility is a committed 24-month loan aimed at providing immediate financial flexibility. The initial drawdown is set at $50 million, with an additional $25 million available based on the achievement of specific production metrics over the next twelve months. The annual interest rates are set at SOFR + 8.0% for drawn amounts, while undrawn funds during the commitment period will benefit from a more favorable rate of 2.4%.
The loan is structured to benefit the Corporation, featuring a twelve-month grace period for principal payments during which no prepayments are allowed. This strategic arrangement enables Canacol to bolster its balance sheet and align with its ongoing operational priorities. The facility is set to mature on September 3, 2026, and secures all significant assets owned by the Corporation.
Harmonized Covenants for Financial Stability
A key component of this arrangement includes covenants that are closely aligned with Canacol's existing obligations, particularly those related 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 critical growth phase.
As of June 30, 2024, the Corporation reported $43 million in cash, showcasing a strong financial position with a leverage ratio of 2.69x. This figure is notably below the existing covenants, which stand at 3.25x (incurrence) and 3.5x (maintenance), indicating a solid fiscal health.
Utilization of Loan Proceeds
Canacol intends to use 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 agreement, Macquarie Group will receive 1,888,448 common share purchase warrants. Each warrant allows 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 set to expire three years after issuance and will require final approval from the Toronto Stock Exchange.
Gas Sales Performance Update
Canacol has also provided an update on its gas sales performance, reporting 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 upward trend is expected to further bolster the Corporation's financial and operational objectives.
About Canacol Energy Ltd.
Canacol is a prominent player in the natural gas exploration and production industry, primarily focused on developments in Colombia. The Corporation is listed on major stock exchanges, including the Toronto Stock Exchange under the ticker CNE, 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 utilized for general corporate purposes to enhance 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, and includes a twelve-month grace period for principal payments.
Who is Macquarie Group?
Macquarie Group is a global financial services provider that Canacol has partnered 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, which increased to about 167 MMscfpd in August 2024.
