LEKOIL (AIM: LEK), the oil and gas exploration, development and production company with a focus on Africa, is pleased to announce the following debt facilities update.
In 2018, as announced, the Company agreed in principle to refinance a portion of and redenominate its outstanding Naira debt facilities, totaling approximately 3.08 billion Naira, into United States Dollars (USD). These facilities included the approximate 2.25 billion Naira facility (principal) from FBNQuest Merchant Bank (“FBNQ MB”) and the 827 million Naira facility (principal and accrued interest) from Sterling Bank plc (“Sterling”). Interest per annum on these facilities were 6% + NIBOR and 26%, respectively.
Documentation for this has now been completed and the Company now has access to a new USD facility of $8.55 million with FBNQ MB, which will be utilised to refinance the outstanding 3.08 billion Naira facility with FBNQ MB. The original Sterling facility has been rolled into this new facility with FBNQ MB, and closed.
The FBNQ MB facility is priced at LIBOR + 10%. There is a six-month principal repayment moratorium with equal, quarterly principal repayments thereafter. As part of the transaction, the tenor on LEKOIL’s facilities with FBNQ MB (including the existing USD facility, amounting to US$5 million) will be extended to 30 June 2021 from 30 June 2019.
The partial refinancing and redenomination allows the Company to mitigate its exposure to local currency and interest rate volatility risks while lowering its cost of capital.