31 March 2016
Greka Drilling Limited (AIM: GDL), the largest independent and specialised unconventional oil & gas driller in Asia, announces that it has secured US$5 million in loan financing from Guaranty Finance Investors LLC ("GFI"), the proceeds of which it expects to use for working capital purposes. The loan, on which interest is payable at the rate of 7% per annum, is repayable on 31 March 2019 and is unsecured (although first priority would be granted to the GFI loan if the Company created any security over its drilling rigs in relation to other indebtedness).
As part of the financing, the Company has issued GFI with warrants to subscribe for 35,000,000 new ordinary shares in the Company at an exercise price of 5p per share, representing a premium of 43% to the Company's closing share price on 29 March 2016. The warrants are exercisable at any time between 1 April 2017 and 31 March 2019. At any time after 31 March 2017 the Company may elect to prepay the loan, provided that the amount repaid (including interest paid previously) would provide GFI with a total annual return of 25%; such prepayment would be deemed to have redeemed the warrants in lieu of issuing new shares.
Randeep S. Grewal, Chairman and Chief Executive of Greka Drilling, commented:
"This loan provides comfort and flexibility for the balance sheet over what we anticipate to be a period of limited activity for the business as announced on 5 February 2016. The Company has enjoyed a long term relationship with GFI and is pleased that this loan demonstrates their long term belief in our business model and potential for the future".
For further information on Greka Drilling, please refer to the Company's website at www.grekadrilling.com or contact:
James Henderson / Rollo Crichton-Stuart
+44 20 3772 2500
Dr Azhic Basirov / David Jones / Ben Jeynes
Nominated Adviser and Broker
Smith & Williamson
+44 20 7131 4000