Primeline Energy Holdings Inc. (CVE:PEH) said on Monday China Development Bank, China Export and Import Bank, and Shanghai Pudong Development Bank have agreed to materially adjust the company’s capital repayments schedule and to reduce the company’s interest rate margin over six-month LIBOR on its outstanding $232mln loan facility to support the company during arbitrations.
As previously announced, Zhejiang Gas, the buyer of the production from the company’s LS36-1 gas field, refused to offtake the contract quantity and pay the price as set out in the LS36-1 gas sale contract (GSC) shortly after the field started commercial production, due to dramatic changes in the market.
Thus, the company has received substantially lower cash flow than forecast and has faced challenging financial conditions.
The company seeks to recover the substantial amounts outstanding due to it because of the disputes with Zhejiang Gas relating to the GSC, and with CNOOC and its subsidiary relating to the GSC implementation and petroleum contract. Each dispute is the subject of current arbitration procedures.
The amendments to the syndicate facility have deferred $36mln of capital repayments over the 12-month period that were previously due.
The company has thus fully met the November repayment in the adjusted schedule, and the loan service is maintained as normal. The syndicate of three Chinese banks has also reduced the company’s interest rate margin from 470 basis points to 335bps over six-month LIBOR from November, until disputes are resolved.
Story by ProactiveInvestors