Corcel PLC, a pan Angolan/Brazilian oil and gas company, has announced the completion of an unsecured convertible loan note facility with Extraction Srl, a natural resource investment group. The facility could potentially extend a total of £10 million to Corcel over a three-year period. The agreement includes an initial funding of £1 million in October 2023 and £1 million in January 2024, with the possibility of an additional £8 million to be made available over the term. The loan proceeds are convertible into new ordinary shares at a fixed price of £0.008 per share, representing a 79.8% premium from the most recent closing price on 15 September 2023. The facility also bears an interest rate of 12% per annum.
The facility will provide both short-term and longer-term funding for Corcel's ongoing operations in Angola and business development in Brazil and elsewhere. Antoine Karam, Executive Chairman of Corcel, stated that the funding will enable the company to drive value creation for shareholders and is indicative of the changes occurring in the business both operationally in Angola and financially in the nature of the funding being utilized. He also mentioned that with this facility in place, the company now has a cost-effective long-term facility it can access without having to consider more dilutive and expensive sources of capital.
The transaction consists of an initial issuance of 1,000 convertible loan notes, which are convertible into new ordinary shares of Corcel at a fixed price of £0.008 per share. Conversion may take place beginning 30 days after the initial issuance at the investor's discretion. The notes will accrue an interest rate of 12% per annum. A second tranche of notes of 1,000,000 is to be issued on the same terms, and additional drawdowns of up to £8,000,000 against the facility on the same terms are to be mutually agreed between the lender and the company over the duration of the facility.
It is important to note that Extraction Srl is 45% owned by Antoine Karam, the Executive Chairman of Corcel. Therefore, the transaction between the company and the lender is considered a related party transaction. However, Antoine Karam has not been involved in the approval of the transaction by the company's board. The directors of the company independent of the transaction have deemed the terms of the transaction to be fair and reasonable for the company's shareholders.
Overall, this convertible loan note facility agreement with Extraction Srl will provide Corcel with funding to support its operations and business development activities, without having to consider more dilutive and expensive sources of capital.