Eco-Stim Energy Solutions, an environmentally-focused oilfield service and technology company, has closed on a USD22 million convertible debt facility with an investment fund managed by Albright Capital Management (ACM).
Under the terms of the agreement, ACM is providing Eco-Stim with a USD22 million convertible debt facility, which will be available to the company for two years.
In addition, Eco-Stim has granted a 30 day option to ACM to purchase USD8 million of the company's common stock in a private placement for USD6 per share. ACM will initially appoint one member to the EcoStim board of directors and if the 30 day option to purchase common stock is exercised, ACM will appoint two additional members to the EcoStim board.
Eco-Stim has made an initial draw of USD11.8 million from the facility. The outstanding debt under the facility will accrue interest at 14 per cent per annum with interest payments due annually in arrears. The amounts drawn under the facility are due and payable on 30 April 2018. Any outstanding balance under the convertible debt facility may be converted into the company's common stock at a price of USD6 per share at the option of ACM. Eco-Stim has the ability to repay the debt facility or force conversion after one year. The convertible debt facility has customary financial and other covenants.
The agreement does not require any minimum amount of funds to be drawn under the facility and Eco-Stim would not be restricted from securing additional equity capital. Eco-Stim may also secure alternative debt financing for new equipment subject to certain limitations.
The net proceeds from the initial capital draw are to be used to fund a portion of Eco-Stim’s capital needs and ongoing operations in Neuquen, Argentina.
The closing of the additional USD8 million equity investment as contemplated under the share purchase option is subject to customary closing conditions and approvals and completion of additional due diligence.
J Chris Boswell, EcoStim's president and chief executive officer, says "We are very excited to complete this initial round of funding with the team from ACM. They bring tremendous emerging-markets experience and knowledge to our company and we believe they will be an excellent financial partner as EcoStim grows its operations outside of the US. Together, we believe that the proprietary field management system and the intelligent completion solutions offered by EcoStim will be in high demand."
