Myfok,
I am not here to defend FAR management. But a few things should be put in perspective. If you refer to Slide 9 of FAR's 21/02/20 Presentation it refers to:
"US$300 million senior secured reserve-based lending (“RBL”
facility from Macquarie Bank, BNP Paribas(3) and Glencore, each to the amount of US$100 million, for the Sangomar Field Development offshore Senegal."
The NP Paribas component was noted as "Subject to syndication".
In addition, they refer to :
"FAR intends to select its preferred provider of junior debt in the coming weeks with assumptions similar to our presentation of 12 Dec 2019 (including a margin over Libor of 12.5%)
FAR anticipates a total funding facility of US$600m"
FAR only had US$100M in cash at that time. Given that FAR need at least US$560M for Sangomar Development plus addition cash for other operations and corporate costs, I cannot see the banks who had signed on, not making their commitment conditional on total funding for the project been sourced and committed. There due diligence would have shown that if FAR defaulted on the project funding they risked loosing the project and hence the bank would loose the funds it had lent. Therefore, I suspect any commitments for funding would have been conditional on the Junior debt been sourced. The bank break fees are usually included by the banks to cover the costs of due diligence and possibly the opportunity costs of setting aside or securing the funds to be lent.
On a brighter note: I refer to page 18 of the half year report on the going concern where thedirectors say:
"In the opinion of the directors, the Group will be in a position to continue to meet its liabilities and obligations for a period of at least twelve months from the date of signing this report, because the Group believes it will execute a sale of the Senegal project and will be able to secure and execute its remaining planned activities over the same period.
The opinion of the directors has been determined after consideration of the abovementioned subsequent events, the Group’s cash position and forecast expenditures and having regard for the following factors:
The status of negotiations with
potential acquirers of the Senegal asset;
The ability to exit default using cash at hand until November 2020;
The option of farming out all or part of the Group’s other assets;
The option to reduce, delay or otherwise deal with the forward development capital and or exploration expenditures of the Group’s remaining interests.
In the event that the Group is unsuccessful in implementing the sale of its interest in the Senegal project, such circumstances would indicate that a material uncertainty exists that may cast significant doubt as to whether the Group will be able to continue as a going concern and therefore whether it will realise its assets and discharge its liabilities in the normal course of business and at the amounts stated in the financial report"
Lets hope that they can come to some agreement with one of the
"potential acquires"I am still hopefull!RegardsSP
(20min delay)