Zoltav enters two new credit facilities

Russia-focussed oil and gas exploration and development company Zoltav updated the market on its plans to commercialise the eastern fields of the Bortovoy licence in Saratov on Monday, reporting that its wholly-owned subsidiary Diall Alliance has entered into two non-revolving credit facilities with PJSC Sberbank of Russia.

The AIM-traded firm said the first loan represented a maximum facility amount of RUB 7.7bn (£78m), with a final repayment date of 25 September 2031.

It said the second loan represented a maximum facility of RUB 700m, with a final repayment date of 1 January 2024.

The first loan would be used to finance investment costs associated with the commercialisation of the eastern fields of the Bortovoy Licence, as well as to refinance Diall Alliance's other loans, including the full repayment of the outstanding principal debt and accrued interest under the Promsvyazbank credit facilities entered into on 13 May 2019 and 16 March 2021.

Interest on the first loan would be payable quarterly at a rate of 9.9% per annum, fixed until 31 December 2023, and thereafter at the Central Bank of Russia’s interest rate plus 2.8% per annum.

The second loan would be used for the payment of VAT on capital expenditures within the framework of the project, with interest payable monthly at a rate of 9.3% per annum.

Both loans were secured against 100% of the shares of Diall Alliance, and all of its assets, with a book value of at least RUB 10m per unit.

“The signing of project finance for East Bortovoy and the development of those fields is both exciting and critical for the company to ensure its future prosperity,” said chairman Lea Verny.

“An indirect consequence of the project finance is that the company will have to substantially reduce its costs.

“In light of this, it is important to the board that we, together with management, evaluate all alternative options to finance corporate overheads and find a solution which will be in the best interests of the company and its shareholders as a whole.”

At 1421 BST, shares in Zoltav Resources were down 17.65% at 28p.