SDX Energy PLC (AIM:SDX, OTC:SDXEF) shares were down around 5% in Thursday morning’s trade after the Morocco-focussed oil and gas firm announced a convertible loan financing which will allow it to advance an energy transition strategy.
The company, in a statement, said the facility – a loan agreement for up to US$3.25mln, starting with an immediate US$2mln drawdown – will be used to immediately reduce outstanding debt to the European Bank for Reconstruction and Development (EBRD) and pay critical service providers to accelerate a drilling campaign in Morocco.
At the same time, SDX said it is continuing the evaluation of proposals for its portfolio of Egyptian assets.
The remainder of the initial loan drawdown supports working capital, SDX added.
"Our vision for SDX is to become the leading energy provider in Morocco, delivering combined gas and renewable energy solutions to our existing and growing customer base,” SDX managing director Daniel Gould said.
“SDX is uniquely positioned to leverage its long presence and infrastructure in Morocco to execute this vision.
“In order to deliver on this vision, the company will access a wider capital market for the renewable projects, which may be financed on a standalone basis."
The convertible loan agreement is with Aleph Finance Ltd though it is syndicated. The debt security is convertible into shares at any time at the option of the individual lenders and repayable 364 days after the initial drawdown.
The conversion price is set at 4.5p (or lower if new shares are issued at a lower price during the life of the loan) and in the final 10 days prior to maturity the conversion price will increase to 6.6p. The loan carries interest at the SOFR (secured overnight financing rate) plus 15%, payable on a quarterly basis.
In London, SDX shares dipped 4.78% to trade at 5.48p valuing the small-cap energy firm at just over £11mln.
The loan note news comes after a busy few months for SDX in which it secured better gas sales terms in Morocco, received multiple offers for its Egyptian assets, appointed executive management and terminated the employment of a senior employee in its local operations in Egypt amidst an investigation.