InfraStrata Plc (LON:INFA) told investors that it has repaid a loan to Baron Oil, a partner in the group’s Islandmagee gas storage project in Northern Ireland.
The €1.8mln loan has been paid early and in cash. It comes after Infrastrata received €1.8mln of a European Commission grant in May.
There had been an option for Baron Oil to take equity, through which it would’ve received 15% of the InfraStrata's subsidiary Islandmagee Storage Limited (IMSL).
An amendment to the prior arrangement will still allow Baron to take 15% of IMSL, if it pays £1.53mln in cash before March 31 2017.
Andrew Hindle, InfraStrata chief executive, said: “We are pleased to continue to be working with Baron to unlock the potential of the Islandmagee gas storage project.
“The Baron loan has facilitated the development of a key piece of gas infrastructure and whilst now repaid in full the amendment affords Baron the continued and extended option to participate in the project.”
Hindle added that Infrastrata is continuing a process to seek new investors for Islandmagee over the summer months, to enable it to proceed through to a final investment decision which is targeted for 2017.
Sam Wahab, analyst at Cantor Fitzgerald, reckons the new arrangement suits Baron Oil.
“This is an encouraging development in our view, with the amendment providing Baron with more time to assess progress on the Islandmagee storage project as the situation in the field unfolds, keeping an eye on the impact the closure of the Rough gas storage facility, in the UK North Sea, may have on gas prices in the UK,” Wahab said in a note.
“Additionally the early repayment of the loan provides Baron more financial flexibility in what has been a challenging period for the sector.”