Canadian oil and gas drilling company Touchstone Exploration Ltd has entered into escrow arrangements with Republic Bank Limited for a US$20-million, seven-year term loan agreement.
“We are pleased to be able to source local financing from Republic Bank, the largest lender in Trinidad and the Caribbean. The financial flexibility of the new facility will allow us to confidently proceed with our Ortoire exploration activities. In addition, the interest payable on the loan is expected to be tax deductible in Trinidad, equating to an after-tax cost of capital of 3.5 per cent, Scott Budau, chief financial officer at Touchstone, shared.
The Canadian company indicated that it will use a portion of the term loan to repay the company’s CN$20-million existing credit facility, and the remainder for general corporate purposes.
The term loan should become effective prior to June 15, 2020, once all conditions have been met, including the completion of security interest filings in Trinidad and Barbados and the receipt of regulatory approvals in Trinidad.
In the meantime, Touchstone will continue to operate under its existing C$20-million credit facility.
“In connection with the existing credit facility, the company granted the lender a production payment equal to 1.33 percent of petroleum sales from Trinidad land holdings, payable quarterly through October 31, 2021. The parties have agreed not to buy out the production payment obligation and as such have entered into an amended production payment agreement to continue the obligation under the previous terms and conditions,” Touchstone said.
Republic Bank Limited acted as the initial lender, arranger, and administrative agent, with its Corporate and Investment Banking Division exclusively arranging the terms of the loan.