Sterling Resources Ltd. (SLG.V) has signed a secured US$12
million bridging loan agreement with a subsidiary of Vitol Holding
B.V. The loan is intended to be used to fund remaining costs of the
Ioana and Eugenia wells offshore Romania, certain other exploration
costs on its Romanian oil and gas licences, ordinary course of
business corporate costs in Canada and Romania and to repay funds
temporarily advanced from the UK subsidiary to fund Romanian
exploration costs in December. Together with existing cash
resources, these funds are expected to last into early February
2013.
The loan is secured by a first-ranking security package over
Sterling's offshore and onshore licences in Romania, a pledge of
the shares of Sterling's Romanian subsidiary, Midia Resources SRL,
and a pledge of certain of Sterling's receivables. The loan bears
interest at a rate of LIBOR plus 1.0 percent, payable in arrears,
subject to a maximum of 2.0 percent per annum during the term of
the loan, and matures on March 31, 2013. As consideration for the
loan, Vitol is receiving 2,418,500 common shares of Sterling at
$0.717 per common share. The loan is repayable out of proceeds
received from Romanian asset sales, including the previously
announced sale of a portion of the Midia licence to ExxonMobil
Exploration and Production Romania and OMV Petrom.
In addition the Company anticipates entering into a
significantly larger private placement debt-based financing in
January 2013. The proceeds of such a financing would allow for
repayment of the Vitol bridging loan and would also fund remaining
Breagh development costs through to first gas, other costs
associated with Breagh and the UK senior secured £105 million loan
facility including any partial loan repayment that may be required
by the lenders of that facility, and other group costs through to
first gas. Sterling is also working to refinance its current
senior secured credit facility for the Phase 1 development of the
Breagh gas field during the next few months.
Sterling also reports that the UK secondary legislation
regarding the changes to Small Field Allowance that benefit the
Cladhan development came into force on December 20. Sterling now
expects to receive in mid-January 2013 the second payment of
US$4.33 million from TAQA Bratani Limited for the sale of 13.5% of
Cladhan earlier this year.
Sterling is up 6 cents, or 8%, to 81 cents mid-morning. Close to
47,000 shares have been traded.