ASX-listed Sino Gas & Energy Holdings Limited has secured a five-year, US$100 million debt facility with Macquarie Bank to fund the developments and an acquisition in China.
The company said the debut facility. along with cash on hand and anticipated cash flow from operations, will fully fund its share of the Linxing and Sanjiaobei projects and the exercise of an option over the Linxing project upon Overall Development Plan (ODP) approval which would make Sino Gas the largest working interest holder in the PSC.
Sino Gas managing director, Glenn Corrie, said US$10 million of the facility has already been drawn to repay and cancel a previous debt facility.
“We are pleased to have finalised the $100 million debt facility ahead of ODP approvals anticipated in the first half of 2018. With adequate liquidity to fund the full field development of both Sanjiaobei and Linxing, Sino Gas is positioned to become a material gas producer during a time of high natural gas demand growth in China with a target of significant free cash flow from 2020,” Mr Corrie said.
Key terms of the facility include:
* 5-year senior non-revolving facility secured against the Company’s assets, including the shares in Sino Gas & Energy Limited (“SGE”)
* US$68 million fully committed and, subject to Macquarie credit approval, an additional US$32 million to potentially further accelerate project development
* Interest rate of LIBOR +8.2% prior to ODP approval, stepping down to LIBOR +6.5% with ODP approvals
* 60% of the amount outstanding at the end of the third year to be repaid in equal quarterly instalments over years four and five, with the remainder due at end of year five
* The facility may be repaid at any time at the full discretion of the Company without penalty
Sino Gas’ PSCs cover an area of approximately 3,000km2 in the Ordos basin in Shanxi, a rapidly developing Chinese province. The region has mature field developments with an established pipeline infrastructure to major markets. Natural gas is a key component of clean energy supply in China, with the 13th Five-Year Plan identifying the Ordos basin as a strategic natural gas source