Canadian specialty finance firm Crown Capital Partners has signed a $15 million term loan agreement with Touchstone Exploration Inc, a Calgary upstream oil and gas company with a primary focus on the Republic of Trinidad and Tobago. Touchstone, which has previously been backed by Crown Capital, said the latest financing will help it develop onshore Trinidad assets and pursue acquisition opportunities. Crown Capital, a provider of debt and quasi-equity to mid-market companies, earlier this year increased the size of its fourth special situations debt fund to $125 million.
Crown Capital Signs $15.0 Million Term Loan with Touchstone Exploration
CALGARY, Nov. 8, 2016 /CNW/ – Crown Capital Partners Inc. (“Crown”) (TSX: CRN), which provides growth capital to successful mid-market companies, today announced the signing in escrow of a $15.0 million term loan (the “Agreement”) with Touchstone Exploration Inc. (“Touchstone”) (TSX: TXP), a Calgary-based company engaged in acquiring interests in petroleum and natural gas rights, and the exploration, development, production and sale of petroleum and natural gas, with its primary focus in the Republic of Trinidad and Tobago.
Touchstone is one of the largest independent onshore oil producers in Trinidad, with assets in several large, high-quality reservoirs that have significant total petroleum initially-in-place and an extensive inventory of low-risk development opportunities. In total, the company currently has interests in over 84,000 gross acres of exploration and development rights. Touchstone’s assets include 21 onshore blocks, 11 of which are currently producing. Total petroleum initially-in-place is estimated to be 1 billion barrels, based on the company’s five key producing blocks. Touchstone also has rights to 208 potential drilling locations representing an estimated 10 years of drilling inventory. For the first six months of 2016, Touchstone’s average production was 1,342 barrels of crude oil per day.
“We are pleased to support Touchstone in its strategy of executing a low-risk, repeatable development program in proven regions of Trinidad,” said Chris Johnson, Crown’s President & CEO. “Touchstone is a low-cost producer with minimal production risk and large oil reserves in place. During this period of low oil prices, the company has successfully focused on operational initiatives to ensure sustainability and future profitability through all commodity price cycles. Looking ahead, given its low production costs, quality of assets and proven model, Touchstone is well positioned to benefit from improvements in the pricing environment.”
Paul Baay, President and Chief Executive Officer of Touchstone, said: “The Crown Capital financing provides us the financial flexibility to focus on the development of our onshore Trinidad assets and to immediately commence a revitalized capital program. It will also enable us to evaluate a number of acquisition opportunities.”
The Agreement provides for a $15.0 million term loan to Touchstone by Crown Capital Fund IV, LP (“Crown IV LP”), an investment fund managed by Crown in which Crown holds a 40% interest. The term loan bears a fixed interest rate of 8.0% per annum, compounded and payable quarterly, and matures in 60 months. In addition, the Agreement calls for Crown IV LP to receive a 1% royalty on Touchstone’s petroleum revenue for 60 months, which will be calculated and paid quarterly. The Agreement will be released from escrow and the loan will be advanced to Touchstone upon satisfaction of conditions precedent, including security registrations in Trinidad in favour of Crown IV LP.
The term loan will replace Touchstone’s existing credit facility. The proceeds will be used to cash collateralize Touchstone’s US$6 million letter of credit relating to its East Brighton property and for general corporate purposes.
Crown (TSX: CRN) is a specialty finance company focused on providing capital to successful Canadian and select U.S. companies that are unwilling or unable to obtain suitable financing from traditional capital providers such as banks and private equity funds. Crown also manages capital pools, including some in which Crown has a direct ownership interest. Crown originates, structures and provides tailored special situation and long-term financing solutions to a diversified group of private and public mid-market companies in the form of loans, royalties and other structures with minimal or no ownership dilution.
This news release contains certain “forward looking statements” and certain “forward looking information” as defined under applicable Canadian and U.S. securities laws. Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “continue”, “plans” or similar terminology. Forward-looking statements in this news release include, but are not limited to, statements, management’s beliefs, expectations or intentions regarding the future growth and performance of Touchstone. Forward-looking statements are based on forecasts of future results, estimates of amounts not yet determinable and assumptions that while believed by management to be reasonable, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Forward-looking statements are subject to various risks and uncertainties concerning the specific factors identified in the Crown’s periodic filings with Canadian securities regulators. See Crown’s most recent Annual Information Form for a detailed discussion of the risk factors affecting Crown. Crown undertakes no obligation to update forward-looking information except as required by applicable law. Such forward-looking information represents management’s best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information.
For further information: Craig Armitage, Investor Relations, firstname.lastname@example.org, (416) 347-8954
Photo courtesy of Touchstone Exploration Inc