CUT BANK, MT, Oct. 20, 2014 /CNW/ - Mountainview Energy Ltd.
("Mountainview" or the "Company") is pleased to announce that its
wholly-owned subsidiary, Mountain Divide, LLC ("Borrower") has
entered into a commitment letter (the "Commitment") with Wells
Fargo Energy Capital, Inc. (the "Lender") with respect to a new
term facility (the "New Facility") and a US$16 million unsecured subordinated convertible
promissory note (the "Note") to replace: (a) the current senior
secured advancing credit facility between the Borrower and the
Lender (the "Old Facility") in connection with the Company's
12-Gage Project in the Williston
Basin in Divide County, North
Dakota; and (b) the 39% after pay-out net
profits interest (the "NPI") associated with the Old
Facility.
The following are some of the key terms and conditions of the
New Facility, including the replacement of the NPI with the
Note:
|
|
|
Type
|
Term loan
facility
|
|
Principle
Amount
|
US$49.5
Million
|
|
Interest and
Repayment
Terms
|
Floating rate
calculated as the "Base Rate" plus 4%. The Base Rate is
defined as the maximum of (a) 4%, (b) the Wells Fargo stated prime
rate, (c) one-half of one percent (0.50%) per annum above the
Federal Funds Rate, or (d) 1.5% above a LIBOR based calculated
rate. At this time, the Base Rate is 4% and the effective
floating rate is 8%. Monthly repayments of outstanding
interest plus principal are required on the New Facility based on
85% of net profits from the 12-Gage Project.
|
|
Maturity
|
October 1,
2016
|
|
Future
Borrowings Under
the New
Facility
|
None
|
|
NPI
Cancellation and
Note
|
The NPI shall be
cancelled/terminated and replaced with the Note, which shall have
the following terms:
|
|
|
|
|
Principle Amount
|
US$16 million
|
|
|
|
|
Interest
|
Annual interest rate of 8%, compounded and payable in
cash or in-kind on a monthly basis and the final payment shall be
on the maturity date unless the Lender elects to convert (see
below)
|
|
|
|
|
Maturity Date
|
All principal and accrued interest will be due and
payable on October 1, 2016, with no pre-payment penalty (subject to
the requirement that the New Facility must be paid out prior to any
pre-payment)
|
|
|
|
|
Optional
Conversion Upon
Default or at
Maturity
|
In the event of a default or if the Note has not been
prepaid or repaid by the maturity date, the Lender may convert the
unpaid portion into common shares of the Company on the conversion
date based on a fully-diluted pre-money valuation as at the
conversion date.
|
|
|
|
|
Cash Payment or
Conversion Upon a
Liquidity Event
|
Upon the closing of a liquidity event prior to the
repayment or conversion of the Note, the Lender will receive
either: (a) a cash amount equal to 125% of the unpaid portion; (b)
common shares of the Company in lieu of the unpaid portion based on
a fully-diluted pre-money valuation as at the date of the liquidity
event.
|
|
|
|
Quarterly
Leverage
Covenant
|
In lieu of
redeterminations of the borrowing base (as funds may not be
re-borrowed once paid), the Lender will impose a new quarterly debt
to EBITDAX leverage ratio covenant, beginning at 5.0X on December
31, 2014 and decreasing to 4.5X on June 30, 2015 and 4.0X on
December 31, 2015. The ratio will be calculated on an annualized
basis beginning with the quarter ended December 31,
2014.
|
|
AMI
|
In connection with
the New Facility, the Lender and the Company will retain an area of
mutual interest ("AMI") in northern Divide County, North
Dakota.
|
|
Security
|
The New Facility is
secured by a first priority mortgage and security interest in the
12-Gage Project.
|
|
Conditions
|
Closing of the New
Facility and the Note is subject to various conditions, including,
without limitation, the following conditions:
- Securing financing of not less than
CAD$15 million and funding the Borrower with not less than CAD$15
million;
- Completion of definitive
documentation;
- No material adverse
change;
- The Lender's due
diligence;
- All applicable regulatory and stock
exchange approvals; and
- Other customary conditions for a
transaction of this nature
|
|
|
As of the date hereof, the Old Facility, which currently is set
to mature on July 1, 2015, had
$49.5 million drawn and amounts
borrowed thereunder bear interest at a floating rate with an 8%
minimum. In addition, all covenants under the old credit
facility carry over to the new facility, including the current
ratio covenant requiring the Company's current ratio to remain
above 1.0:1.0.
READER ADVISORIES
This news release contains forward-looking statements. More
particularly, this news release contains statements in connection
with replacing the Old Facility and the NPI, respectively, with the
New Facility and the Note, respectively, and the expected terms
thereof. The forward-looking statements contained in this document
are based on certain key expectations and assumptions made by
Mountainview. Although Mountainview believes that the expectations
and assumptions on which the forward-looking statements are based
are reasonable, undue reliance should not be placed on the
forward-looking statements because Mountainview can give no
assurance that they will prove to be correct. Since forward-looking
statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual
results could differ materially from those currently anticipated
due to a number of factors and risks. These include, but are not
limited to, the failure to obtain necessary regulatory approvals;
risks associated with the oil and gas industry in general (e.g.,
operational risks in development, exploration and production;
delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of
reserve estimates; the uncertainty of estimates and projections
relating to production, costs and expenses; health, safety and
environmental risks; commodity price and exchange rate
fluctuations; and uncertainties resulting from potential delays or
changes in plans with respect to exploration or development
projects or capital expenditures). Readers are cautioned that
the foregoing list is not exhaustive of all possible risks and
uncertainties.
The forward-looking statements contained in this document are
made as of the date hereof and Mountainview undertakes no
obligation to update publicly or revise any forward-looking
statements or information, whether as a result of new information,
future events or otherwise.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Mountainview Energy Ltd.