o The Company and Gemcorp have executed the final senior debt documentation.
o Interest rate margin fixed at 14% for Tranche A and 16% for Tranche B above SOFR.
o The upside participation for Gemcorp is based on a percentage of free cash flows after debt servicing for the life of the 3-year facility.
o First draw down to primarily retire interim funding used for construction, will be available shortly.
Walkabout Resources (ASX: WKT), is pleased to announce that the Lindi Jumbo Senior Debt facility has now been executed for up to US$25 million (US$20m Tranche A and optional US$5m for Tranche B).
The Company and Gemcorp have executed the agreement for a senior debt facility. The debt will be subject to an interest rate margin of 14% for Tranche A and 16% for the optional Tranche B incremental facility above the benchmark Secured Overnight Financing Rate (SOFR).
Gemcorp will benefit from an upside participation based on a percentage of free cash flow, after debt servicing for the 3-year period of the loan as opposed to an issue of shares or options. As Lindi Jumbo will be in construction, commissioning and start-up for most of year 1, no free cash flow is anticipated during this initial period. This structure provides Gemcorp with Lindi Jumbo upside participation and avoids equity dilution. It also ensures cash flow participatory payments will only be paid if free cash flow is available.
The facility will be available for drawdown until March 2024. During the preceding period, the undrawn balance of Tranche A will attract a commitment fee until drawn.
The Senior Debt facility is subject to a number of customary terms and conditions for a financing facility of this nature including a debt service cover ratio. The group is required to maintain a Debt Service Reserve for two current quarter’s debt payments at all times. Gemcorp will also be entitled to cash sweeps of 25 -50% of any cash surplus over US$5m to be applied against the outstanding loan principal.
The first principal repayment is planned for the 3rd quarter of 2024. The initial drawdown of senior debt funds will be available shortly and will be primarily used to refinance existing interim funding measures and transaction costs. These interim funding measures included vendor finance from our contractors TNR and Jinpeng and a bridge loan from shareholders and directors. As reported previously, these interim arrangements have substantially funded the construction costs since February of this year.
CEO of Walkabout Resources, Andrew Cunningham commented; “We are very pleased with the final execution of the debt facility and to have the support of Gemcorp as we move into the final stages of the construction of the Lindi Jumbo Graphite Mine. The structure of the financing allows us to avoid equity dilution on the transaction and will allow shareholders to benefit in the medium to long term.”
This announcement is authorised for release by the Board.