Aleem Khan

Toron­to-list­ed Touch­stone Ex­plo­ration Inc an­nounced that two of its in­di­rect whol­ly-owned Trinidad sub­sidiaries, Touch­stone Ex­plo­ration (Trinidad) Ltd and Primera Oil and Gas Lim­it­ed, have "en­tered in­to an agree­ment with The Bank of No­va Sco­tia, as ad­min­is­tra­tive agent, col­lat­er­al agent and ini­tial lender, for a US$50 mil­lion cred­it fa­cil­i­ty ma­tur­ing on De­cem­ber 2, 2017. Sco­tia­bank T&T Ltd act­ed as sole lead arranger."

Touch­stone chief fi­nan­cial of­fi­cer Scott Bu­dau said in a state­ment: "The Trinidad-based cred­it fa­cil­i­ty pro­vides us the fi­nan­cial flex­i­bil­i­ty to build up­on our suc­cess­ful 2014 Trinidad drilling pro­gramme in­to 2015."

Up to US$15 mil­lion will be avail­able im­me­di­ate­ly, with the re­main­ing bal­ance avail­able fol­low­ing the pe­ri­od­ic re­de­ter­mi­na­tion of the bor­row­ing base cal­cu­lat­ed by the val­ue as­signed to the net proved re­serves at­trib­ut­able to Touch­stone's on­shore prop­er­ties lo­cat­ed in T&T, the com­pa­ny said.

"The pro­ceeds bor­rowed un­der the cred­it fa­cil­i­ty will be used by the bor­row­ers for the ex­plo­ration, de­vel­op­ment, pro­duc­tion and sale of pe­tro­le­um of those prop­er­ties and for gen­er­al cor­po­rate pur­pos­es.

"The cred­it fa­cil­i­ty will bear in­ter­est at a rate equal to an ad­just­ed LI­BO rate or the lender's base rate, plus an ap­plic­a­ble mar­gin."

The cred­it fa­cil­i­ty is se­cured by a pledge of the Touch­stone's eq­ui­ty in­ter­ests in its ma­te­r­i­al sub­sidiaries, to­geth­er with their re­spec­tive as­sets.

The cred­it fa­cil­i­ty agree­ment con­tains cer­tain re­stric­tive covenants which in­clude, but are not lim­it­ed to, lim­i­ta­tions on: in­debt­ed­ness; re­strict­ed pay­ments; merg­ers and con­sol­i­da­tions; re­pay­ment of debt; in­vest­ments, loans and ad­vances; sales of as­sets and sub­sidiary eq­ui­ty; hedge ter­mi­na­tions; amend­ments to or­ga­ni­za­tion­al doc­u­ments ad­verse to lenders or ma­te­r­i­al debt agree­ments; af­fil­i­ate trans­ac­tions; liens; re­stric­tions on div­i­dends and dis­tri­b­u­tions by re­strict­ed sub­sidiaries; and change in busi­ness and neg­a­tive pledge agree­ments.

The cred­it fa­cil­i­ty agree­ment al­so in­cludes cer­tain fi­nan­cial and pro­duc­tion covenants, which re­quire the main­te­nance of a min­i­mum net debt to earn­ings–be­fore in­ter­est, tax­es, de­pre­ci­a­tion, de­ple­tion, amor­ti­za­tion, oth­er non-cash items and ex­plo­ration costs–ra­tio, a max­i­mum in­ter­est cov­er­age ra­tio and min­i­mum month­ly pro­duc­tion.

The cred­it fa­cil­i­ty agree­ment al­so caters for events such as de­fault and cir­cum­stances un­der which pre­pay­ments would be manda­to­ry.

Touch­stone Ex­plo­ration Inc is a Cal­gary-based com­pa­ny "en­gaged in the busi­ness of ac­quir­ing in­ter­ests in pe­tro­le­um and nat­ur­al gas rights, and the ex­plo­ration, de­vel­op­ment, pro­duc­tion and sale of pe­tro­le­um and nat­ur­al gas."

Touch­stone op­er­ates on­shore in T&T and West­ern Cana­da.

The com­pa­ny's com­mon shares are trad­ed on the Toron­to Stock Ex­change un­der the sym­bol TXP.