GO Energy (LON:LGO) have announced they can now fully repay a loan due to French banking giant BNP Paribas (EPA:BNP), following the signing of a new funding agreement with Lind Partners LLC.
The securing of a new $8.6 million Convertible Security Funding Agreement, partially managed by the Lind Partners, will facilitate the loan repayment to BNP Paribas and secure operations for the immediate future.
The preliminary $1.825 million of funding from the Agreement will be used in order to settle debts held with BNP Paribas, thus taking the company out of default.
Neil Ritson, LGO’s Chief Executive, commented:
“We are delighted that LGO will now be able to advance the drilling and production campaign in Goudron.”
“We are pleased with the support of Lind who are providing a manageable convertible finance facility, at a significant premium to our recent trading price, validating the value in the business.”
Similarly, Phillip Valliere, Lind Partners Managing Director, commented:
“The LGO management team has done well to survive an extremely difficult period in the oil sector while repaying US$11 million to BNPP and significantly reducing amounts owed to unsecured creditors.”
LGO also acknowledged the evident market difficulties the oil industry has faced in recent years. The statement added:
“This has been a challenging period for the Company with the falling oil price and the loss of downhole equipment in the GY-678 well resulting in the breach of the covenants on the Company’s loan facility with BNP.”
Earlier in October, the company was forced to default on the loan due to its inability to support oil field operations in Trinidad.
The group anticipates that this latest move will ensure the immediate deployment of funds – previously held in Trinidad – to recommence its drilling programme in Goudron. The company hailed the agreement as “a major turning point”, as it looks to capitalise on its assets.
The company, which explores the development of oil and gas energy resources, will no doubt be lifted by news of the deal reached the Organization of the Petroleum Exporting Countries (OPEC) last Wednesday. After weeks of market anticipation, OPEC agreed to its first oil output cut in eight years.
Since the announcement of the securing of funding, LGO energy shares rose by 28.09% as of 4:15PM (GMT).