Swala Energy Limited has said it has agreed with Magna Equities II LLC the provider of an interim financing mechanism entered into by way of provision of Convertible Notes in December 2014.
Under the agreement Swala Energy says it shall undertake to redeem all of the outstanding 452,381 Convertible Notes currently held by Magna at a cost of US $598,500.
According to the Australian explorer’s CEO Dr. David Mestres Ridge the Company has decided to undertake this move as it believes it to be prudent financial management and it will partly reduce the various pressures it has seen in recent times on the Company’s share price.
“The recent farm-down of the two Tanzanian licences has allowed us the flexibility to redeem these outstanding Convertible Notes. This stabilizes the issued share capital of the Company, which current stands at 160,144,607 shares, ahead of our planned corporate and asset activity in 2016. We are grateful to Magna for its support of the Company over the past 10 months, especially at a time of such considerable market,” he says.
Dr. Ridge adds that the provision of this interim financing mechanism by Magna provided the company with a source of funding during a time of uncertainty in financial markets thereby and as previously stated, removing the need to undertake a capital raising from shareholders at that time.
Under the terms of the Facility entered in December 750,000 Convertible Notes were to be issued as subsequent funding of up to US $750,000 per tranche available at Swala’s request and was available to be drawn down every 40 calendar days under the Facility up to US$2,250,000.
During the same period the company had also raised some AU $75,000 from private investors for the issue of 543,475 fully paid ordinary shares.
The funds were to be used for additional work (particularly in Block 12B), basin modeling work and long-lead items for drilling in Tanzania, business development and general administrative expenditure.
Swala currently holds substantial equity in assets in Tanzania (Pangani and Kilosa Kilombera licenses) and Kenya (Block 12B).