UK-headquartered energy company, Sound Energy announced on Friday that it has secured a backup loan for up to USD 1.9 million to help maintain its operations over the next few months.
The decision is a precaution as Sound Energy awaits the completion of the sale of its Moroccan subsidiary, Sound Energy Morocco East (SEME), to Managem SA, a Moroccan mining company.
According to a statement from Sound Energy, the company has not yet borrowed any money from the credit facility but has it in place as a backup plan ahead of the completion of the significant deal.
The loan was arranged with a private investor through a deal introduced by Lyndisfarne Partners Ltd, a British company.
Under its terms, a short-term loan is available for three months starting September 1, 2024, repayable at an interest rate of 15% per quarter.
If Sound Energy does draw on the loan, it will need to repay it either within three months or shortly after the Moroccan sale is finalized, whichever comes first.
As part of the agreement, the loan will be secured against shares in Arran Energy Holdings Limited, another wholly-owned subsidiary of Sound Energy.
If the company does not end up using the loan, however, it will nevertheless have to pay a fee of £50,000 (about USD 63,000).
The loan facility is intended to provide a safety net for Sound Energy, ensuring that the company has enough working capital to continue operations smoothly while finalizing the Moroccan deal, which is expected to close in the coming months.