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Oilexco secures short-term funding package

Oilexco secures short-term funding package
Oilexco said yesterday it had agreed new bridging finance of up to £31.25million with the Royal Bank of Scotland and the company's banking syndicate.

Oilexco said yesterday it had agreed new bridging finance of up to £31.25million with the Royal Bank of Scotland and the company’s banking syndicate.

The North Sea oil and gas operator said the facility had been agreed up to January 31 next year.

Oilexco said last month that it and investment banks Morgan Stanley and Merrill Lynch were continuing to evaluate a variety of additional financing options and strategic alternatives. It said yesterday discussions were continuing with various parties over a potential investment in or an acquisition of the company and either some or all of its assets.

Oilexco said that at this stage, its cash flow from operating activities and the bridging finance just announced would not be sufficient to satisfy both its current obligations and the requirements of capital-investment programmes.

The Canadian firm said its ability to undertake its investment and business plans in the short term depended on obtaining additional financing and the continued support of its creditors. It said it would owe its banks about £460million if the bridging funds were drawn down.

Ithaca Energy said yesterday it would enter 2009 in a strong cash position following the early completion of a deal in which Dutch-owned Dyas UK is taking a 25.25% stake in the firm.

The Canadian operator said Dyas had paid £35million already, converting it from a loan arranged earlier, and the remaining £5million agreed would continue as a loan to Ithaca until the transaction was completed early next year. Taking into account working-capital adjustments, Ithaca will receive about £38.5million in total.

Ithaca chief executive Iain McKendrick said: “The two companies will work together on projects including the Bea-trice oil field, the Jacky devel-opment and a well planned on the Carna exploration prospect in the southern gas basin of the North Sea.”

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