Urals Energy: Petrosakh Takes 300m Rb Credit Facility
The Board of Urals Energy PCL, the independent exploration and production company with operations in Russia, is pleased to announce that its subsidiary undertaking, JSC Petrosakh (“Petrosakh”), has entered into an 18 month revolving credit facility (the “Loan”) with the Sakhalin branch of OJSC Sberbank of Russia (“Sberbank”) under which Sberbank will provide, by way of several tranches, the sum of 300 million roubles (representing approximately US$5.4 million at prevailing exchange rates) to Petrosakh for working capital financing.
The key terms of the Loan are that:
· it is repayable on 29 December 2016 (the agreement also provides for early repayment of the Loan);
· interest is chargeable at the rate of 14.28% plus 1%. The lowest rate of 14.28% is subject to Petrosakh meeting monthly turnover targets and having average cash balances in its bank account;
· it is secured by way of a pledge over property and cash flows from Petrosakh; and
· the agreement provides for a parent company guarantee from Urals Energy.
The proceeds of the Loan will be used by the Company for working capital financing at Petrosakh. The revenues from Petrosakh’s current activity will be used to progress its 2015 – 2016 drilling plan, as well as financing other Petrosakh capital expenditure. This CAPEX is expected to have less than one year’s payback period and will allow Petrosakh to avoid using services provided at unreasonably high monopolistic prices by external providers and consequently optimise its operating and transportation expenses.
