Dec 2014 Financial News

Scotiabank lends Touchstone US$50m

Dec 08, 2014

Toronto-listed Touchstone Exploration Inc  announced that two of its indirect wholly-owned Trinidad subsidiaries, Touchstone Exploration (Trinidad) Ltd and Primera Oil and Gas Limited, have “entered into an agreement with The Bank of Nova Scotia, as administrative agent, collateral agent and initial lender, for a US$50 million credit facility maturing on December 2, 2017. Scotiabank T&T Ltd acted as sole lead arranger."

Touchstone chief financial officer Scott Budau said in a statement: “The Trinidad-based credit facility provides us the financial flexibility to build upon our successful 2014 Trinidad drilling programme into 2015.”

Up to US$15 million will be available immediately, with the remaining balance available following the periodic redetermination of the borrowing base calculated by the value assigned to the net proved reserves attributable to Touchstone's onshore properties located in T&T, the company said.

“The proceeds borrowed under the credit facility will be used by the borrowers for the exploration, development, production and sale of petroleum of those properties and for general corporate purposes.

“The credit facility will bear interest at a rate equal to an adjusted LIBO rate or the lender's base rate, plus an applicable margin.”

The credit facility is secured by a pledge of the Touchstone’s equity interests in its material subsidiaries, together with their respective assets. 

The credit facility agreement contains certain restrictive covenants which include, but are not limited to, limitations on: indebtedness; restricted payments; mergers and consolidations; repayment of debt; investments, loans and advances; sales of assets and subsidiary equity; hedge terminations; amendments to organizational documents adverse to lenders or material debt agreements; affiliate transactions; liens; restrictions on dividends and distributions by restricted subsidiaries; and change in business and negative pledge agreements.

The credit facility agreement also includes certain financial and production covenants, which require the maintenance of a minimum net debt to earnings—before interest, taxes, depreciation, depletion, amortization, other non-cash items and exploration costs—ratio, a maximum interest coverage ratio and minimum monthly production.

The credit facility agreement also caters for events such as default and circumstances under which prepayments would be mandatory.

Touchstone Exploration Inc is a Calgary-based company “engaged in the business of acquiring interests in petroleum and natural gas rights, and the exploration, development, production and sale of petroleum and natural gas.”

Touchstone operates onshore in T&T and Western Canada.

The company’s common shares are traded on the Toronto Stock Exchange under the symbol TXP.

Source:
Aleem Khan
Trinidad Guardian
Monday December 8, 2014

http://www.guardian.co.tt/business/2014-12-08/scotiabank-lends-touchstone-us50m