Bankers Petroleum expands credit facilities

CALGARY, Feb. 25 – Bankers Petroleum Ltd. said it had formally entered into negotiations with the International Finance Corporation (“IFC”) (a member of the World Bank Group), and the European Bank for Reconstruction and Development (“EBRD”) for provision of a reserve-based long-term financing of up to US$110 million to fund upcoming capital requirements and working capital needs for the Company’s Albanian projects.
Subject to ongoing discussions with EBRD/IFC, completion of all required documentation for approval, necessary regulatory and stock exchange approvals and receipt of final approval from each of IFC, EBRD and Bankers Board of Directors, it is expected that this facility will be in place during the second quarter of 2009.
The credit facility is expected to consist of two six-year revolving facilities, aggregating US $50 million each, and two eight-year term loans, totaling US $10 million, to be used for environmental remediation purposes.
All of the facilities are expected to be funded equally between EBRD and IFC, and involve Bankers’ wholly-owned subsidiary, Bankers Petroleum Albania Ltd. Subject to all other conditions precedent, the US $10 million term loan is expected to be available immediately upon preparation and finalization of an environmental remediation action plan by Bankers, amounts under the first US $50 million tranche of the revolving facility will be fully available when the Brent oil price stabilizes above US$55 per barrel, and the second US$50 million tranche is subject to mutual agreement among Bankers, EBRD and IFC when Bankers’ production exceeds 10,000 bopd and the Brent oil price stabilizes above US$62 per barrel unless another suitable oil price threshold is agreed among Bankers and EBRD/IFC.
As part of the facility and subject to Toronto Stock Exchange (“TSX”) approval, Bankers has reserved for issuance sixteen million common share purchase warrants (eight million for each of IFC and EBRD), subject to completion of the loan documentation. When issued, each warrant will entitle EBRD/IFC to purchase one common share of the Company at a price of $1.50 per common share. The warrant price represents a 25% premium to the five-day volume weighted average common share trading. The warrants will be exercisable when the Brent oil price stabilizes above US$55 per barrel until the earlier of, i) one year from such date, or ii) 45 days after the date on which the Company has notified the lenders that its common shares close at or above the exercise price for twenty consecutive trading days.
Abby Badwi, President and CEO of Bankers stated that “this new credit facility, in conjunction with the Company’s existing US$35 million credit facility, funds generated from operations, potential warrant exercise proceeds and cash on hand, will provide the basis to expand its capital development program when confidence returns to the energy sector and higher oil prices are realized. Bankers’ Albanian projects have a flexible capital expenditure program that is currently focused on high-impact, low-cost, maintenance levels for the first half of 2009. Commencing in the second half of 2009, Bankers expects to increase its activities when business conditions improve and the IFC/EBRD revolving facility is expected to become available. In addition, this strategic long-term investment by EBRD and IFC, as lenders and potential equity partners, will allow the Company continued access to competitive and sustainable financing arrangements to fund currently planned and future growth opportunities in Albania.”