Sterling Resources Announces US$12 M Bridging Loan and Further Financing Arrangements; Shares Up 8%

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.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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