Mountainview Energy Ltd. announces commitment for new credit facility

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Oct 20, 2014, 04:30 ET

CUT BANK, MT, Oct. 20, 2014 /PRNewswire/ - Mountainview Energy Ltd. ("Mountainview" or the "Company") is pleased to announce that its wholly-owned subsidiary, Mountain Divide, LLC ("Borrower") has entered into a commitment letter (the "Commitment") with Wells Fargo Energy Capital, Inc. (the "Lender") with respect to a new term facility (the "New Facility") and a US$16 million unsecured subordinated convertible promissory note (the "Note") to replace: (a) the current senior secured advancing credit facility between the Borrower and the Lender (the "Old Facility") in connection with the Company's 12-Gage Project in the Williston Basin in Divide County, North Dakota; and (b) the 39% after pay-out net profits interest (the "NPI") associated with the Old Facility.

The following are some of the key terms and conditions of the New Facility, including the replacement of the NPI with the Note:


*Type*	Term loan facility
*Principle Amount*	US$49.5 Million
*Interest and Repayment* *Terms*	Floating rate calculated as the "Base Rate" plus 4%. The Base Rate is defined as the maximum of (a) 4%, (b) the Wells Fargo stated prime rate, (c) one-half of one percent (0.50%) per annum above the Federal Funds Rate, or (d) 1.5% above a LIBOR based calculated rate. At this time, the Base Rate is 4% and the effective floating rate is 8%. Monthly repayments of outstanding interest plus principal are required on the New Facility based on 85% of net profits from the 12-Gage Project.
*Maturity*	October 1, 2016
*Future Borrowings Under* *the New Facility*	None
*NPI Cancellation and* *Note*	The NPI shall be cancelled/terminated and replaced with the Note, which shall have the following terms:

	Principle Amount	US$16 million

	Interest	Annual interest rate of 8%, compounded and payable in cash or in-kind on a monthly basis and the final payment shall be on the maturity date unless the Lender elects to convert (see below)

	Maturity Date	All principal and accrued interest will be due and payable on October 1, 2016, with no pre-payment penalty (subject to the requirement that the New Facility must be paid out prior to any pre-payment)

	Optional Conversion Upon Default or at Maturity	In the event of a default or if the Note has not been prepaid or repaid by the maturity date, the Lender may convert the unpaid portion into common shares of the Company on the conversion date based on a fully-diluted pre-money valuation as at the conversion date.

	Cash Payment or Conversion Upon a Liquidity Event	Upon the closing of a liquidity event prior to the repayment or conversion of the Note, the Lender will receive either: (a) a cash amount equal to 125% of the unpaid portion; (b) common shares of the Company in lieu of the unpaid portion based on a fully-diluted pre-money valuation as at the date of the liquidity event.

*Quarterly Leverage* *Covenant*	In lieu of redeterminations of the borrowing base (as funds may not be re-borrowed once paid), the Lender will impose a new quarterly debt to EBITDAX leverage ratio covenant, beginning at 5.0X on December 31, 2014 and decreasing to 4.5X on June 30, 2015 and 4.0X on December 31, 2015. The ratio will be calculated on an annualized basis beginning with the quarter ended December 31, 2014.
*AMI*	In connection with the New Facility, the Lender and the Company will retain an area of mutual interest ("AMI") in northern Divide County, North Dakota.
*Security*	The New Facility is secured by a first priority mortgage and security interest in the 12-Gage Project.
*Conditions*	Closing of the New Facility and the Note is subject to various conditions, including, without limitation, the following conditions: Securing financing of not less than CAD$15 million and funding the Borrower with not less than CAD$15 million; Completion of definitive documentation; No material adverse change; The Lender's due diligence; All applicable regulatory and stock exchange approvals; and Other customary conditions for a transaction of this nature

As of the date hereof, the Old Facility, which currently is set to mature on July 1, 2015, had $49.5 million drawn and amounts borrowed thereunder bear interest at a floating rate with an 8% minimum. In addition, all covenants under the old credit facility carry over to the new facility, including the current ratio covenant requiring the Company's current ratio to remain above 1.0:1.0.

READER ADVISORIES

This news release contains forward-looking statements. More particularly, this news release contains statements in connection with replacing the Old Facility and the NPI, respectively, with the New Facility and the Note, respectively, and the expected terms thereof. The forward-looking statements contained in this document are based on certain key expectations and assumptions made by Mountainview. Although Mountainview believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Mountainview can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to obtain necessary regulatory approvals; risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures). Readers are cautioned that the foregoing list is not exhaustive of all possible risks and uncertainties.

The forward-looking statements contained in this document are made as of the date hereof and Mountainview undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Mountainview Energy Ltd.