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Ikkuma Resources Announces Closing of Debt Financing & Amendment to Credit Facilities

May 26, 2017, 08:00 AM
Filed Under:
Related: Second Lien

Ikkuma Resources Corp. announced that it has completed a financing with Alberta Investment Management Corporation, on behalf of certain of its clients, providing for a $45.0 million second lien senior secured term loan, which bears annual interest at 7.25% and matures on March 31, 2022. The proceeds from the Second Lien Facility were made available in a single draw and amounts borrowed under the Second Lien Facility that are repaid or prepaid will not be available for re-borrowing. In addition, for no additional consideration, Ikkuma has issued warrants ("Warrants") to purchase common shares of the Corporation to AIMCo, entitling AIMCo to acquire up to 6.75 million Common Shares for a period of three years, at an exercise price of $0.86 per Common Share, equal to a 40% premium to the volume weighted average trading price of the Common Shares for the 20 trading day period prior to the date of issue of the Warrants.

In conjunction with the approvals for the Second Lien Facility, the Corporation entered into an Amended and Restated Credit Agreement with respect to its existing credit facilities with its banking syndicate, comprised of The Toronto-Dominion Bank and Alberta Treasury Branches as joint bookrunners, whereby the borrowing base was re-determined at $25.0 million and the maturity date was extended to May 31, 2019. A financial covenant was added, being a debt to EBITDA ratio not to exceed 4.0x on a rolling four quarter basis, beginning on June 30, 2017. The Second Lien Facility is subject to the same financial covenant.

Net proceeds from the Second Lien Facility will be used to pay down all outstanding indebtedness under the Credit Facilities resulting in approximately $10 million of cash deposits and an undrawn $25 million Credit Facilities. These financing transactions significantly strengthen Ikkuma's liquidity and secures funding for the Corporation to continue developing its Cardium oil play. Ikkuma will provide further guidance on its 2017 capital program in its upcoming first quarter press release.


Desjardins Securities Inc. acted as financial advisor to the Corporation with respect to the Second Lien Facility and was paid a fee equal to 1% of the principal amount of the Second Lien Facility. 

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