Latin America-focused oil and gas company Echo Energy (LON: ECHO) is restructuring its debt and raising at least £450,000 via a placing at 0.25p a share. This was announced after the market closed and the share price had closed 5.06% higher at 0.27p.
Lombard Odier Asset Management has agreed to convert its €5m 8% secured convertible debt facility into shares at 0.45p each, while accrued interest will be converted into 213.9 million shares at 0.25p each.
A further €10m of debt plus interest, will be converted into shares at 0.45p each. Shareholder approval is required to issue the additional shares.
That should leave €10m of Luxembourg-listed 8% secured notes. This remaining debt will be extended until 2032 and the interest charged reduced from 8% to 2%. That is as long as the note holders agree.
Subscribers to shares in the placing will receive 1.07 warrants for each share taken up. The warrants are exercisable at 0.25p each.
The cash from the placing will fund working capital so the cash generated in Argentina can be used to finance an increase in production. It will also fund the costs of the debt restructuring.
In the first half of 2022, Echo Energy’s 70% share of production at the Santa Cruz Sur assets in Argentina was 261,290 barrels of oil equivalent, including oil and gas. Over the next six months a 40% increase in production is planned.
Echo Energy believes it will be able to publish its 2021 accounts by the end of August.
