Source: Sharecast
The AIM-traded onshore hydrocarbon production, development and exploration company said the loan would run for 24 months from drawdown and carry interest of 5% per year, rising to 8% on overdue amounts.
Security has been granted over Union Jack’s interest in PEDL180 and PEDL182 at the Wressle oilfield in Lincolnshire, where Egdon is operator with a 30% interest and Union Jack holds 40%.
Under the repayment terms, Union Jack said it would pay Egdon 60% of monthly operating free cash flow generated from Wressle, first against unpaid interest and then against principal.
The remaining 40% of free cash flow can be retained by the company.
If Wressle’s monthly operating free cash flow was insufficient, interest for that month will be capitalised and added to the loan balance, with interest then accruing on the enlarged amount.
All outstanding principal and accrued interest must be repaid in full after 24 months.
The facility also includes restrictions preventing Union Jack from creating further security over the secured assets without Egdon’s consent, taking on additional debt other than unsecured convertible loans, or paying dividends, distributions or returns of capital without lender approval.
Egdon would also receive rights of first refusal and matching rights if Union Jack seeks to sell any interest in PEDL180, PEDL182 or the related joint operating agreements, with the matching right remaining in place for 12 months after repayment of the loan.
Until final repayment, Union Jack must support Egdon’s role as operator of Wressle and generally cannot vote or act to remove or replace it, except in cases of gross misconduct.
At 1156 BST, shares in Union Jack Oil were down 1.53% at 3.55p.
Reporting by Josh White for Sharecast.com.
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