Block Energy plc, the production and development company focused on Georgia, is pleased to announce it has closed a senior secured loan facility ("Loan Facility") of USD 1.06 million (c. £0.86 million at 1 February 2023), with various existing shareholders and members of Block's management team.
The funds raised provide the Company with additional headroom to accelerate its Project I development programme. This includes additional wells and side-tracks, following completion of well WR-B01Za, which is currently being drilled.
The Loan Facility is for a term of 18 months, commencing 2 February 2023, at which point the principal is repayable in full. The loan carries an interest rate of 16% p.a., payable quarterly in arrears in cash. The Company can elect to repay amounts outstanding under the Loan at the end of each quarter, in part or in full, subject to a 2% early repayment fee.
A debenture has been provided by the Company to the lenders as security, providing a fixed and floating charge over the Company's property and assets.
Each lender will receive warrants exercisable at any point during the three years from the Closing Date. The exercise price of each warrant shall be 1.7 pence per ordinary share. The number of warrants to be issued to each lender shall correspond to an exercise value equal to 50% of their respective loan commitment under the Loan Facility ("Warrant Value"). Therefore, the number of warrants to be issued to lenders as part of the USD 1.06 million loan in aggregate is 25,330,249.
The loan facility can be increased up to a maximum of USD 2.00 million during the term of the loan, from the USD 1.06 million already committed, with the existing lenders having a right of first refusal for a period of 20 business days to participate in any extension.
Related Party Transactions
The Company's Chief Executive Officer, Paul Haywood has provided USD 90,000 of the Loan, and its current Chief Operating Officer and former board director, Ken Seymour, has provided USD 100,000 of the Loan.
Mr Haywood and Dr Seymour are each treated as a related party of the Company pursuant to the AIM Rules. Consequently, the participation of Mr Haywood and Mr Seymour in the provision of the Loan Facility constitutes a related party transaction for the purposes of AIM Rule 13.
The Independent Directors (being Jeremy Asher and Philip Dimmock), consider, having consulted with SPARK Advisory Partners Limited, the Company's nominated adviser, that the terms of the related parties' participation in the Loan Facility are fair and reasonable insofar as Shareholders are concerned.
Commenting, Phil Dimmock, Chairman of Block Energy plc, said:
"The Loan Facility will allow Block to accelerate its Project I development programme, with the aim of increasing near-term cashflows, without the need for dilutive financing. It also means Block can acquire long-lead items, required for the drilling of additional sidetracks and wells on the West Rustavi/Krtstanisi field. This Loan Facility strengthens our position going into a busy 2023, when we aim to increase production from Project I and progress our other three Projects."