Buru Energy Ltd (ASX:BRU) has entered into an agreement with Alcoa of Australia Limited for the reschedule of its current debt repayment obligations.
Buru owes Alcoa $12.5 million related to an original gas sales agreement entered into in 2007.
Originally, this $12.5 million repayment was due on 30 June 2018 and was unsecured with no interest payable.
Buru and Alcoa have now reached a further agreement to vary the repayment terms under which payments will be made in the tranches set out below:
- $5.0 million to be paid on or before 15 July 2017;
- $2.5 million to be paid on or before 31 December 2018;
- $2.5 million to be paid on or before 31 December 2019; and
- $2.5 million to be paid on or before 31 December 2020.
The debt continues to be unsecured and will now be subject to an agreed market based interest rate on the outstanding balances commencing 1 January 2018, and payable annually in arrears.
Eric Streitberg, chairman, commented:
“We are very pleased to have reached this agreement with Alcoa which provides repayment terms that are more aligned with the company’s operations and expected cash flows.
“The restructure means we now have flexibility in our financial arrangements and are looking forward to the income from the restart of production at Ungani.
“The relationship with Alcoa remains strong and we will continue to consult with them regarding their future gas requirements.”
Tranche repayment details
The $2.5 million annual tranches are further subject to an accelerated capital repayment mechanism based on Buru’s gross revenue from Ungani oil sales exceeding an agreed base level.
This aligns the amortisation of the remaining Alcoa loan to the future oil revenue profile of Buru’s 100% owned Ungani Field, and provides more funding flexibility for Buru to repay this debt from surplus cash flow.
Buru’s cash balance at 30 June 2017 was $18.7 million.
Ungani Oilfield
During June 2017, Buru completed the initial field testing and commissioning program as part of its restart of production from its 100% owned Ungani Oilfield in the Canning basin of Western Australia and is currently ramping up production to 1,250 bopd.
The first proceeds from oil sales from production at Ungani will be received after the lifting of the first ~80,000 barrel cargo from Wyndham expected in September 2017.