London-listed player Lekoil has provided inside details concerning its newly secured $184million loan funding from the sovereign wealth fund of Qatar for the appraisal drilling and initial development programme activities on the Ogo field within OPL 310.
According to details of the contract seen by Businessday, the loan will be disbursed in five tranches over eleven months period, with the first drawdown intended to occur in February 2020.
The tranching of the drawdown of funds under the terms of the Facility is expected to enable LEKOIL to meet the costs commitments under the envisioned work programme as and when they arise.
Lekoil said the loan have a tenure of seven years from the date of first disbursement which was secured with the shares and assets of Lekoil and Mayfair Assets and Trust Limited.
“This includes a moratorium on both the interest and principal repayments commencing from the date of the loan until six months after the commencement of commercial sale of production from the field,” Lekoil said.
Lekoil said the repayment of the principal and interest will occur subsequently, in equal instalments, on a semi-annual basis while also noting that the loan is not secured against any other assets or interests of the Company, including its interest in the producing Otakikpo marginal field.
“The annual interest rate payable on amounts drawn under the loan is 3.72 per cent; with an upfront fee of 2.75 percent which is payable upon drawdown of the Facility,” Lekoil said.
Lekoil said a Debt Service Reserve Account will be established twelve months after the end of the moratorium period with a one-off amount equal to six months of debt service standing to its credit.
“The loan is subject to event of default clauses, and a provision that the employment of the Company’s CEO cannot be terminated without good cause during the term of the Facility,” Lekoil said.
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The loan was arranged by Seawave Invest Limited (Seawave), an independent consultancy firm specialising in cross-border transactions with an exclusive focus on Africa.
“After deducting the commission payable to Seawave by LEKOIL for arranging the loan, and the upfront fee payable by LEKOIL to the QIA as set out above, the net proceeds of the Loan available to Lekoil are approximately $174.3 million,” Lekoil said.
As a condition to the provision of the loan, Lekan Akinyanmi, LEKOIL’S Chief Executive Officer (CEO), will pledge his full holding of 39,138,601 ordinary shares in the Company as part of the security package for the Facility.
Akinyanmi will be compensated with a one-time fee in an amount equal to $1,840,000 which shall be set off against the existing director loan made by the Company to the CEO in December 2014 of $1,704,000.
If the pledged shares are foreclosed upon, the Company shall issue to the CEO, such number of new ordinary shares of nominal value $0.00005 each in the capital of the Company as is equal to the number of the pledged shares.
In connection with securing the loan, Akinyanmi will also be granted an award of up to 30,000,000 new ordinary shares in the Company to be issued at nil cost and allotted in five equal instalments if, and when the Company’s ordinary share price reaches the following hurdles: 20 pence, 25 pence, 30 pence, 35 pence and 40 pence per share respectively.
Each of these share price hurdles must be satisfied by the seventh anniversary of the date of grant of the Award Shares (being today) and each share price hurdle must have been met for a minimum period of 30 consecutive dealing days.
