By Lisa Kerner
Charlotte, N.C., Dec. 2 – Torchlight Energy Resources, Inc. announced an agreement to sell a series of 13% notes totaling up to $40 million to a group of institutional lenders.
The notes mature two years from their date of sale. The first six months of interest on the notes will be due in advance.
Closing of the senior secured debt is subject to certain terms and conditions, according to a company news release.
Torchlight’s initial draw will be a minimum of $10.35 million. The funds will be used to reduce payables and to provide working capital for development, drilling and completion of the company’s wells in Oklahoma, Kansas and Texas.
The lenders will receive a fee equal to 3% of gross proceeds raised and no warrants will be issued.
Additionally, Torchlight will issue a term override to the lenders of 2% on its Hunton assets for the term of the notes only.
The lenders have deposited $5 million into escrow as part of the transaction to effectuate the call provisions of Torchlight’s series A notes, which will be released at closing.
Under the securities purchase agreement, subject to lender approval, Torchlight may sell additional notes as needed, from time to time, to fund future drilling obligations.
Plano, Texas-based Torchlight is an oil and gas exploration and production company.
| Issuer: | Torchlight Energy Resources, Inc.
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| Issue: | Senior secured debt
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| Amount: | Up to $40 million
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| Coupon: | 13%
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| Maturity: | Two years from sale date
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| Announced: | Dec. 2
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| Settlement: | To be determined
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| Distribution: | Private placement
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