Swala Oil & Gas (Tanzania) PLC has announced that it has entered into a letter of intent with a global institutional investor Exotix Partners LLP for the placement of junior secured 5-year corporate bonds covering the first investment tranche approximately US$130 million in debt financing to fund this material transaction.
According to Swala Oil and Gas the transaction shall be partly funded through the issuance of preference shares in the Company, partly through the assumption of pre-existing corporate debt obligations and partly in cash.
In agreement with the counter-party, the transaction will complete in independent tranches, the final one of which shall be preferentially placed with Tanzanian institutions through a Tanzanian shilling-denominated, US dollar-linked, 5-year corporate bond issuance. Swala adds it is already in discussions with these institutions and shall update the market on their completion.
“We are delighted at the show of confidence by sophisticated institutional investors in both the Company and in the Tanzanian energy sector. Swala will be working hard over the next weeks to close the first tranche of this material transaction. For our shareholders, owners of the 106 million shares that we have on issue, we are seeking to create continuous value growth over the next decade or more and allow the Company to continue to expand both inside Tanzania, in Africa and overseas. We aim to create further value for local institutions through our second corporate bond tranche, in line with our commitment to help in the development of the Tanzanian capital markets,” says Swala CEO, Dr. David Mestres Ridge.
Late last year Swala Oil & Gas (Tanzania) plc announced it engaged the same investor to place corporate bonds of up to a value of $120 million in order to finance successful acquisition of Block D in Burundi.
The explorer has been going through financial issues unable to secure any funding to continue its activities or realize its assets thus very likely unable to contribute to the fulfill the commitments as per the agreement with the operator according to a report by HQ advisory in 2016.
Swala Oil and Gas has a 25% equity interest in, and is the operator of, the Kilosa-Kilombero and Pangani licences both in Tanzania as well as Block D in Burundi.