Canacol to tap US$75mn credit facility

Canacol Energy has secured a US$75 million credit line with Australian investment bank Macquarie Group as it seeks to bankroll its South American operations, the company said on Wednesday. 

An initial drawdown of US$50mn will be followed by an additional disbursement of US$25mn if certain production targets are met over the next year, according to a Canacol statement. 

The flexible loan has a two-year term with interest to be charged at the secured interbank overnight interest rate (SOFR) plus 8.0% on drawn amounts and 2.4% on undrawn amounts.

Canacol said it aimed to enter a hedging agreement with Macquarie to fix the rate. 

The facility includes a 12-month principal payment grace period and precludes prepayments in the first year. The operation is secured by all material assets of Canacol.

"Covenants on the facility have been largely harmonized with [our] existing... 2028 senior unsecured notes and senior unsecured revolving credit facility, which matures in February 2027," Canacol said. 

In addition to the loan, Macquarie will receive 1,888,448 common share purchase warrants, entitling the Sydney-based firm to purchase shares at a price based on the five-day volume-weighted average trading price. 

These warrants will expire three years after issuance, pending approval by the Toronto Stock Exchange, Canacol said. 

It added that proceeds from the credit line would be used for general corporate purposes, without providing details. 

Canacol, which has E&P assets in Colombia and Bolivia, has said it expects to outlay capital expenditure in the range of US$138-151mn in 2024, down from US$215mn last year.