The credit facilities consist of two six-year revolving facilities, aggregating $50 million each to be used for the development of the Patos Marinza oil field and two eight-year term loans, aggregating to $10 million, to fund environmental remediation of the oil field. All of the facilities will be funded equally between EBRD and IFC. Subject to fulfilling all other conditions precedent, the $10 million term loan is expected to be available immediately, amounts under the first $50 million tranche of the revolving facility will be available when the Brent oil price stabilizes above $55 per barrel (45 consecutive days), and the second $50 million tranche is subject to mutual agreement among Bankers, EBRD and IFC when Bankers Petroleum’s production exceeds 10,000 bopd and the Brent oil price stabilizes above $62 per barrel unless another suitable oil price threshold is agreed among Bankers and EBRD/IFC.
As part of the facility, Bankers Petroleum has issued 16 million common share purchase warrants (eight million for each of IFC and EBRD), each warrant will entitle EBRD/IFC to purchase one common share of the company at a price of $1.50 per common share which was priced at a 25% premium to market when this transaction was announced on February 25, 2009. The warrants will be exercisable when the Brent oil price stabilizes for 10 consecutive trading days above $55 per barrel and until the earlier of, one) one year from such date, or two) 45 days after the date on which the company has notified the lenders that its common shares have closed at or above the exercise price for 20 consecutive trading days.
Abby Badwi, president and chief executive officer of Bankers Petroleum stated that this $110 million debt financing is more than just a credit facility; it’s a strategic investment with two influential global organizations who have significant presence and initiatives in Albania. Their financial support at this time of tight credit markets is vital to carrying out a large development project at the Patos Marinza oil field and we particularly appreciate their expertise, and efforts to involve other stakeholders, in tackling the environmental clean-up challenges ahead of us. In addition, this sizable long-term investment will allow the company continued access to competitive and sustainable financing arrangements to fund currently planned and future growth opportunities in Albania.
This project is a good example of how investing in the private sector can lead to tangible benefits for people on the ground, said Somit Varma, IFC’s Global head for oil, gas, mining, and chemicals. While IFC provides financing to help improve recovery rates and accelerate domestic oil production, we also help the company to contribute to environmental remediation initiatives aimed at improving living conditions in the surrounding area.
With this project, the EBRD is providing much needed long-term funding to support private investments in the Albanian oil sector. By investing to modernise in Bankers Petroleum’s operations, the Bank is helping to revamp the oil industry in Albania, by fostering further privatisation and helping set high standards of environmental management, said Paul Shapiro, the EBRD operations leader for the project. The on-shore oil deposits are an important source of public revenue and energy security for Albania which can now look forward to more sustainable and efficient development further explained Kevin Bortz, director EBRD natural resources team.
