Benz enters into long-term production financing
Benz Energy Ltd BZG
Shares issued 34,130,683
1999-01-12 close $0.54
Wednesday Jan 13 1999
Mr. Prentis Tomlinson reports Benz Energy has entered into a non-recourse $7-million production payment with Shell Capital with the potential to increase the production payment to $25-million. At Shell Capital's discretion, it is anticipated that the balance could be financed later in the first quarter of 1999 following the completion of two development wells currently drilling at the Oakvale Dome field in Mississippi, asset rationalization, and certain other requirements. The proceeds of the new financing are being used to retire $3-million of currently due secured debt, working capital needs and completion of the two development wells. The production payment comprises a sale of a royalty interest in certain properties of the company providing Shell Capital with a portion of the company's production revenues from those properties. The company's immediate focus is to reduce and restructure the company's debt while increasing production to take advantage of the new opportunities in the market. The two development wells being drilled at the company's major discovery at Oakvale Dome in Mississippi will provide the opportunity to accomplish this goal. To date, Benz is encouraged by what it has seen in drilling results despite delays from mechanical problems, and we expect to complete the drilling of the Howell well in one to two weeks. The second tranche of production financing will be used to retire the company's remaining $15-million of mezzanine debt, leaving only the $36.25-million of long-term convertible debentures as debt to the company. At that point, the company's cash flows should be sufficient to meet working capital obligations and to finance continued development drilling.
*************************************************************************
Just in case you missed it. Good news/ bad news. We live to play another day, but we had to give up some of the crown jewels to get there.
|
