Offshore

snabel
23.04.2019 kl 09:40 1045

Electromagnetic Geoservices ASA ("EMGS" or the "Company") is pleased to announce that it has secured a second guarantee facility, to supplement the Company’s existing USD 10 million guarantee facility. The new guarantee facility (the “New Facility”) has a maximum limit of USD 7.5 million and is limited in scope to providing certain performance and warranty guarantees required under the multi-year acquisition contract which the Company, as announced in the stock exchange notification published 23 April 2019, has received a letter of award for.

The New Facility is provided by the Company’s existing bank. At the time of establishment, the New Facility will be fully guaranteed by the Company’s three largest shareholders (the “Shareholder Guarantors”). The shareholder guarantees will over time be replaced by a pledged cash depot (the “Pledged Depot”) to be built up by the Company, which will serve as security for the New Guarantee.

A counter guarantee agreement entered into between EMGS and the Shareholder Guarantors regulates the Company’s obligations towards the Shareholder Guarantors in connection with the New facility. The Company will pay the Shareholder Guarantors a guarantee commission of 8% p.a. of the guaranteed amount. As the Pledged Depot is built up, the guarantee commission will be reduced to 1.5% p.a. for such parts of the New Guarantee which are covered by the Pledged Depot, and to 0% as the Shareholder Guarantors are released form their obligations towards the bank. A cash sweep mechanism has been agreed with the Shareholder Guarantors to ensure swift build-up of the Pledged Depot. Under current estimates, the Company expects that the Pledged Depot will reach the full USD 7.5 million during the course of the first quarter 2020.

Under certain change of control events, including a sale by a Shareholder Guarantor of its shares in the Company, EMGS will be obligated to, within 30 days, replace the relevant Shareholder Guarantor with a new guarantor (or otherwise ensure the release of such Shareholder Guarantor’s obligations towards the bank).

CEO of EMGS, Bjørn Petter Lindhom, comments:

“The New Facility is a prerequisite for the Company to be able to move forward with the multi-year acquisition contract for which we have received a letter of award from the customer. As such, this is a pivotal part of the puzzle in EMGS’ efforts to secure a material addition to the Company’s backlog.

EMGS is very grateful towards the Shareholder Guarantors who have made this possible, and highly committed to building up the required Pledged Depot as soon as practicable possible to ensure that the bank will release the Shareholder Guarantors from their obligations.”

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