Oracle Power Plc (LON:ORCP) revealed on Thursday that it has entered into a loan agreement with Brandon Hill Capital Limited, a substantial shareholder in the company, to provide it with a working capital facility of up to £250,000.
The AIM-listed developer of a combined lignite coal mine and mine mouth power plant located in the south-eastern Sindh Province of Pakistan, said that under the terms of the loan agreement, £50,000 is immediately available for Oracle.
Subsequent to the initial drawdown, it added, the company will receive up to £50,000 per month up to a maximum of £250,000, subject to approval in advance by Brandon Hill with regard to the proposed use of proceeds.
The group said a coupon of 12% per annum - accruing daily - will be applied only to those funds used by the company, but there are no options, warrants or convertible aspects to the loan and no fee is owed to Brandon Hill for providing the funds.
It pointed out that the loan is unsecured, with the principal and outstanding interest being repayable 12 months from the date of the agreement, or earlier, at Oracle's option, without penalty.
The firm said the proceeds from all draw-downs will be applied to operational and general working capital purposes.
Naheed Memon, CEO of Oracle Power, said: "Significant progress has been made as per recent updates and we expect the funds under this Loan Agreement will be sufficient to reach Definitive Agreements with the Chinese Partners later this year. I look forward to providing further updates over the next few months.”