Both Gulf and Harrington are significant shareholders of the company. Under each agreement – both of which include arm’s-length terms – the relevant lender may occasionally advance one or more loans from the company upon request by the company. A lender can decline a requested loan, or only approve a portion of the loan in its sole discretion. Any loan will be evidenced by a secured convertible promissory note. A repayment schedule attached to the applicable note will set out the terms of repayment of the principal amount, interest and any fees of the loan, including and without limitation the maturity date and the rate of interest, and the conversion price.
Each loan will be secured by a general security agreement (GSA), pursuant to which the company granted in favour of the lenders a security interest in all of the company’s present and after-acquired real and personal property (the collateral). The collateral does not include the company’s NAAZ2 shares and all of the rights of the company that are derived from or connected to these shares (NAAZ2 shares derivative rights). However, the collateral does include all dividends, income, interest and other amounts (other than additional NAAZ2 shares) paid to and received by the company on the NAAZ2 shares and the NAAZ2 shares derivative rights.
If the company acquires the necessary consents to grant the lenders a lien on the NAAZ2 shares and NAAZ2 shares derivative rights, this property will become part of the collateral.
All or any portion of the principal amount, accrued interest and fees outstanding under a note can be converted into common shares of the company by the lender at any time before the earlier of: the date of repayment by the company of all its obligations owing under a loan; and the date that is the five years from the date of the note corresponding to such loan, at a conversion price per share set out in the applicable note and subject to adjustment upon the occurrence of particular events. The company’s board and the Canadian Securities Exchange will approve the conversion price for each loan.
The principal amount advanced by a lender must be used by the company for working capital requirements in respect of the production project in the Khalakan Block in the Kurdistan Region, general corporate purposes and any CAPEX for the purchase by the company of property or assets permitted under the loan agreement.
Pursuant to amendment and restatement agreements dated 14 February 2017 between the company and the lenders, all of the existing short-term loan agreements with the lenders have been amended and restated on the terms and conditions of their respective loan agreement. The existing short-term loan agreements, meanwhile, have been terminated. Each lender received a secured convertible promissory note as evidence of the existing outstanding amount of the principal, interest and fees owed to each lender (existing obligations). The amount of existing obligations owed to Gulf is US$5 603 371, whilst the other lender is owed US$140 936. Each promissory note matures on 14 February 2018, accrues interest at the rate of 10% per year, and can be converted into common shares of the company at US$0.02 per share.
Read the article online at: https://www.lngindustry.com/liquid-natural-gas/16022017/range-energy-enters-loan-agreements-with-gulf-lng-and-harrington/