Baku, Azerbaijan, Aug.5
By Leman Zeynalova – Trend:
Canada’s Zenith Energy company, operator for development of Muradkhanli-Jafarli-Zardab block of oil fields onshore Azerbaijan, has reduced the interest rate for two trade finance facilities in the country, Trend reports citing the company.
“In Azerbaijan, the two trade finance facilities entered into by the Company's subsidiary have been renewed for a further 12 months, as outlined in the most recent Financial Statements for the three months ended June 30, 2019, with a favourable reduction of the interest rate to 9% per annum being in the course of implementation at present,” reads a message from Zenith.
On January 11, 2019, the Company announced that it had issued and listed a new EMTN (European Medium-Term Note), on the Third Market (MTF) of the Vienna Stock Exchange, with an interest rate of 8% per annum payable semi-annually, and a final maturity date of December 20, 2021. Zenith is pleased to report that, to date, all interests payable in relation to the aforementioned instrument have been paid.
On March 11, 2019, the Company reported that it had favourably renegotiated the US$1,500,000 Convertible Loan facility (the "Convertible Loan") first announced on September 5, 2018, to include the possibility of optional redemptions to be made by the Company in lieu of conversion of the Facility by the Lenders, and had extended the repayment date of the Convertible Loan to May 31, 2020.
The Company can confirm that the outstanding balance of the Convertible Loan is now $770,000.
On January 7, 2019, the Company announced that it had entered into a new unsecured convertible loan facility (the "Loan Facility") with a consortium of lenders.
The Loan Facility has an interest rate of 8% per annum, payable quarterly, it is repayable on January 15, 2021 and, to date, the Company has only drawn down £544,500 in relation to the Loan Facility.
On March 25, 2019, the Company announced that it had issued unsecured notes (the "Notes") for a total amount of £90k (CAD$153k) with 900,000 share purchase warrants attached. The payment date of the Notes is September 20, 2019.
In Switzerland, the Company is pleased to report that the financial debt position of its Swiss registered oil trading subsidiary, Altasol SA, has been brought to zero.
Zenith has been notified that the guarantor of the facility of the value of US$1,458,000, Mr Andrea Cattaneo, Chief Executive Officer of the Company, has been advised towards initiating a process of litigation as it appears that his guarantee has been obtained unlawfully. The full amount of the principal, and related accrued interest, of the loan are represented and accounted as a liability in the audited Financial Statements of the Company as of March 31, 2019 and in the Q1 Financial Statements as of June 30, 2019. The result of the potential litigation could be a reduction or cancellation of this liability.
The Company has adopted a funding strategy directed towards debt financing in order to minimise equity dilution. To facilitate the securing of debt financing to support Zenith's expansion, on October 10, 2018, the Company announced that ARC Ratings, SA. had assigned the Company a medium to long-term issuer credit rating of "B+" with Positive Outlook.
"As is clear, we are taking important steps to progressively improve the Company's debt position and minimise our reliance on the issue of equity to finance Zenith's development. We expect the prospective success of our drilling operations during the period ahead to enable us to make further significant improvements to our balance sheet,” Andrea Cattaneo, Chief Executive Officer of Zenith, said.
Azerbaijan’s state oil company SOCAR and Zenith Aran Oil Company signed a Rehabilitation, Exploration, Development and Production Sharing Agreement (REDPSA) in March 2016 for a block that includes the Muradkhanli, Jafarli and Zardab oil fields. Zenith Energy Ltd established its subsidiary company Zenith Aran Oil Company Ltd for production operations in these three fields. Production under the agreement began in August 2016.
Zenith holds an 80-percent participating interest in the three fields within the contract area, while SOCAR retains the remaining 20 percent. The agreement is for 25 years, with a potential extension by five additional years.
The total area of the Muradkhanli, Jafarli and Zardab fields is 642.2 square kilometers, and according to the contract, it is divided into rehabilitation and exploration territories.
The Muradkhanli-Jafarli-Zardab block is located in the Yevlakh-Agjabadi oil and gas region of Imishli district of Azerbaijan. The Muradkhanli field was discovered in 1971, Jafarli - in 1984, and Zardab - in 1981.
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