Sound Energy enters loan agreements to advance Tendrara

Sound Energy has entered binding conditional agreements over $18m of phase one Tendrara LNG development loan note financing, it announced on Wednesday.

The AIM-traded firm said that as a result, with the other remaining conditions precedent to the phase one LNG gas sales agreement announced by the company on 29 July now waived by the parties, the LNG gas sales agreement was now unconditional.

In satisfying the final material condition, the company said it had entered into agreements with the lender Afriquia Gaz for an $18m 6% secured loan note maturing in December 2033.

The loan, which was secured on the issued share capital of Sound Energy Meridja, would be available to be drawn down in whole or in tranches at the company's choosing, over a three-year period from 24 December, and would be applied towards the development of the Tendrara production concession.

Interest on the drawn principal of the loan of a fixed 6% per annum would be payable quarterly, but deferred and capitalised semi-annually until the second anniversary of entry of the loan agreements.

After that, principal and deferred interest would be repayable annually in equal instalments starting seven years from the date of execution of the loan agreements.

Conditions of the loan included a project contract with Italfluid Geoenergy for the provision of a gas processing and liquefaction facility relating to the phase one development being effective and evidence being provided to the lender of the issue by the Tendrara joint venture partners of a ‘notice to proceed’ to Italfluid.

“We are delighted to have executed all loan note documentation which ensures that Sound Energy will be fully funded for its share of phase one development capital,” said executive chairman Graham Lyon.

“This is a key milestone for the company and we will now move to issuing the notice to proceed to Italfluid and drawing down initial funding from the Afriquia Gaz loan in order to proceed with execution of the phase one development.”

At 1121 GMT, shares in Sound Energy were flat at 2.45p.