INTENTION TO FLOAT ON AIM
PROPOSED DEBT TO EQUITY CONVERSION
Greenfields Petroleum Corporation (TSX-V: GNF), a production focused company with operated assets in Azerbaijan (the "Company"), is pleased to announce its intention to seek admission of its common shares, to trading on the London Stock Exchange's AIM Market (“AIM”) under the ticker GNF.L (“Admission”) and the restructuring of senior secured debt to strengthen the balance sheet.
Concurrently with Admission, and subject to the receipt of regulatory approval, the Company is seeking to raise up to US$60 million by way of private placement of new common shares in the capital of the Company (the "Placing") which is anticipated to occur in November 2018 (the “Transaction”). The net proceeds of the Placing will be used to strengthen the Company's balance sheet and accelerate the Company's growth through the implementation of an active work program that is anticipated to deliver a step-change in production and financial profile.
As part of the Transaction, the Company also announces that it has reached an agreement with its senior lender and largest shareholder, Vitol Energy (Bermuda) Ltd. ("Vitol"), to convert up to US$20 million of the US$53.3 million debt owed to Vitol into equity (the "Conversion") at the Placing price (up to a maximum of CDN $2.00). It is expected that on Admission the Company's outstanding debt to Vitol will be US$18.1 million. The Conversion is subject to the completion of the Placing and Admission and the receipt of approval of the TSX-V.
Further, Vitol has agreed to reduce the interest rate for the outstanding principal by 3 per cent. (to LIBOR plus 8 per cent.) and further reduce the quarterly principal repayment obligations from 2019 to 2021 by 50 per cent. when the outstanding principal is reduced below US$30 million.
The planned equity raise and debt conversion which is expected to reduce existing other payables by up to US$2.3 million is intended to result in the Company's debt reducing from approximately US$57 million to less than US$20 million on Admission. The proposed debt conversion and accompanying repayment programme will strengthen the Company's balance sheet and provide the platform from which to deliver sustainable growth.
In addition to the Conversion, and a planned debt paydown of US$18.3 million, the balance of the proceeds will be applied to provide approximately US$40 million to numerous development opportunities identified in the recently updated Competent Person Reports. These projects include; drilling new development gas wells and recompleting oil and gas wells from existing platforms and re-implementing waterflood in the oil fields to increase and sustain production volumes. All of the new projects will utilise existing infrastructure and production facilities.
Mirabaud Securities Limited is acting as Broker to the Company in relation to the Placing and Admission and Strand Hanson is acting as Nominated Adviser to the Company in connection with the Admission.
Subsequent to the proposed Admission, it is the intention that the Company's common shares will continue to be listed on the TSX-V.