ICBC Standard Bank contributes $105 million USD to a $525 million USD syndicated loan to Serica Energy to increase its liquidity to support acquisitions and investments

Project narrative

On December 15, 2023, a syndicate of five banks — including ICBC Standard Bank — entered into a $525,000,000 USD syndicated multi-currency reserves-based lending facility (RBL) agreement with Serica Energy plc — a United Kingdom-based independent oil and gas company — to increase its liquidity to support acquisitions and investments. Financial close was reached on December 18, 2023. This loan carried a maturity period of six years, a final maturity date of December 31, 2029, an amortization-based repayment profile beginning December 31, 2026 (a grace period of three years), and an initial interest rate of SOFR plus a margin of 3.90%. There was also an uncommitted accordion option to double the facility to $1.05 billion USD exercisable for three years. The facility had a $100 million USD sub-limit for the issuance of letters of credit without cash security. The borrowing base assets (BBA) consisted of all of Serica's interests in its producing fields except the 50% interest in the Rhum field. If greater than 50% of the facility was drawn, the minimum commodity hedging requirement was obligated to equal 50% of the BBA's expected production in the first year and 30% of it in the second year, while the hedging requirement would be halved if less than 50% of the facility was drawn. The facility had a financial covenant of Net Debt to Adjusted EBITDAX greater than or equal to 3.5x tested semi-annually. The facility's limit was subject to semi-annual redeterminations. The proceeds were to be used by the borrower to increase its liquidity to support its acquisitions and investments; it replaced Serica's existing RBL and junior facilities that it had acquired when it merged with Tailwind Energy Investments in March 2018, of which $271 million USD was drawn and would be repaid by the new facility in January 2024 and the junior facility was undrawn. Each lender, including ICBC Standard Bank, contributed $105.00 million USD to the loan syndicate. In addition to ICBC Standard Bank, the following lenders contributed to the loan syndicate: DNB ASA, ING Bank N.V., Nedbank Corporate and Investment Banking (Nedbank CIB), and Natixis. DNB served as structuring and coordination bank (SCB), facility agent, and documentation bank, and bookrunner mandated lead arranger (BMLA). ING Bank served as SCB and BMLA. Nedbank CIB served as BMLA. Natixis served as mandated lead arranger. ICBC Standard Bank served as lead arranger. This loan was secured by (i.e. collateralized against) a first fixed charged on all rights, title, and interests in the borrowing base asset licenses; all rights, title, and interest in the 291 ordinary shares of £1.00 GBP each in Tailwind Energy Investments Ltd held by Serica Energy; all rights, title, interests in insurances, intercompany loans, hedging agreements, designated accounts, and account proceeds; a first legal assignment on all rights, title, and interest in each insurances, intercompany loans, hedging agreements, and all related rights; a first floating charge on all its undertaking, property, assets, and rights of the chargers, with the Rhum field excluded from all security; as charged by Serica Energy plc and Serica Holdings UK Limited in a composite debenture dated January 17, 2024 to security trustee the London Branch of DNB Bank ASA and a floating charge agreement dated January 12, 2024 by Serica Energy plc in favor of DNB Bank.