(TSX Symbol - PEF; NYSE AMEX Symbol - PED)
CALGARY, Oct. 20 /CNW/ - Petroflow Energy Ltd. ("Petroflow" or the "Company") is pleased to announce that the Company recently concluded a borrowing base update under its bank loan agreement (the Facility) maintaining its overall current borrowing capacity of $ US 110 million. Guaranty Bank in Houston is acting as lead agent with Texas Capital Bank, also in Houston, acting as co-agent for the Facility.
Duncan Moodie, the Company's Chief Financial Officer stated; "We appreciate that our banks continue to work with the Company during this period of low commodity prices. We are also pleased that the banking operations of Guaranty Bank have been sold to BBVA Compass Bank. BBVA Compass is among the 25 largest banks in the US based on deposit market share and ranks as the fourth largest bank in Texas".
The Facility now consists of an "A" tranche with a maturity date of January 1, 2012 and a borrowing base of $ US 100 million. Interest rates on the "A" tranche range from LIBOR plus 2% to LIBOR plus 2.5% depending on the percentage of funds actually borrowed. The "A" tranche interest rate floor is 5.5%. The Facility also includes a second "C" tranche that has an eligibility of $ US 10 million and an interest rate floor of 7.5%. The "C" tranche has a maturity date of September 30, 2010. The Facility contains a number of affirmative and negative operating and financial covenants, including a requirement that the Company raise $ US 18 million of additional equity to be applied against the outstanding loan balance by the middle of December 2009.
This news release contains statements that may constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities legislation as they involve the assessment that the Facility will impact favorably the Company's financial situation. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks, uncertainties and factors that could cause actual results to differ materially from those anticipated by Petroflow and described in the forward-looking statements. These risks, uncertainties and factors include, but are not limited to, the Company's ability to draw funds on the Facility as anticipated, the Company's ability to raise sufficient additional equity by mid December 2009, the notion that the ongoing value of the Company's oil & gas reserves will continue to support the Facility's borrowing base, and other adverse general economic conditions that may negatively impact the Company and its ability to maintain as well as repay Facility borrowings. Additional information on these and other factors, which could affect Petroflow's operations or financial results, are included in Petroflow's reports on file with Canadian securities regulatory authorities. We assume no obligation to update forward-looking statements should circumstances or management's estimates or opinions change unless otherwise required under securities law.
The Toronto Stock Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this news release.
SOURCE PETROFLOW ENERGY LTD.
For further information: For further information: Petroflow Energy Ltd., Sanford Andrew, President & COO, (307) 277-2145; Petroflow Energy Ltd., Duncan Moodie, Chief Financial Officer, (403) 539-4320, www.petroflowenergy.com