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Touchstone Enters into Escrow Arrangements for $20 Million Term Loan

Source: 5/27/2020, Location: South America

Touchstone Exploration Inc. announces that its indirect wholly-owned subsidiary, Touchstone Exploration (Trinidad) Ltd., has entered into escrow arrangements for a US$20 million, seven-year term loan agreement (the "Term Loan") with Republic Bank Limited, as initial lender, arranger and administrative agent. The Term Loan was arranged exclusively by the Corporate and Investment Banking Division of Republic Bank.

The Term Loan is expected to become effective prior to June 15, 2020 once all conditions precedent have been met, which include the completion of security interest filings in Trinidad and Barbados and the receipt of regulatory approvals in Trinidad. A portion of the Term Loan proceeds will be used to repay the Company's C$20 million existing credit facility, with the remainder used for general corporate purposes.

Scott Budau, Chief Financial Officer, commented:
"We are pleased to be able to source local financing from Republic Bank, the largest lender in Trinidad and the Caribbean. The financial flexibility of the new facility will us allow to confidently proceed with our Ortoire exploration activities. In addition, the interest payable on the loan is expected to be tax deductible in Trinidad, equating to an after-tax cost of capital of 3.5%. We would also like to give our sincere thanks to Crown Capital, who has supported us since 2012."

Prior to the effective date of the Term Loan, Touchstone continues to operate under its existing C$20 million credit facility. In connection with the existing credit facility, the Company granted the lender a production payment equal to 1.33 percent of petroleum sales from Trinidad land holdings, payable quarterly through October 31, 2021. The parties have agreed not to buyout the production payment obligation and as such have entered into an amended production payment agreement to continue the obligation under the previous terms and conditions. The total payout of the existing credit facility will include the C$20 million principal balance, all accrued interest thereon, and a 1.0% prepayment fee.

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