TRANSATLANTIC PETROLEUM LTD. (TSE:TNP) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement.
DenizBank Credit Facility and 2017 Term Loan. On August 23, 2016, the Turkish branch of TransAtlantic Exploration Mediterranean International Pty Ltd (“TEMI”), a subsidiary of TransAtlantic Petroleum Ltd. (the “Company”), entered into a general credit agreement (the “Credit Agreement”) with DenizBank, A.S. (the “Lender”). The Credit Agreement is a master agreement to which the Lender may make loans to TEMI from time to time to additional loan agreements.
On November 28, 2017, the Lender entered into an additional approximately $20.4 million term loan (the “2017 Term Loan”) with TEMI under the Credit Agreement. The 2017 Term Loan is in addition to the Company’s term loan currently outstanding with the Lender, as described in the Company’s previous periodic reports filed from time to time with the Securities and Exchange Commission. The Company will use the proceeds from the 2017 Term Loan for general corporate purposes, including launching a new a drilling program.
The 2017 Term Loan bears interest at a fixed rate of 6.0% (plus 0.3% for Banking and Insurance Transactions Tax per the Turkish government) per annum. The 2017 Term Loan has a grace period through July 2018 during which the 2017 Term Loan bears no interest and no payments are due. Thereafter, the 2017 Term Loan is payable in one monthly installment of approximately $1.4 million in July 2018, nine monthly installments of $1.2 million each through April 2019, five monthly installments of $1.0 million each through September 2019, one monthly installment of $1.2 million in October 2019, and two monthly installments of $1.0 million each through December 2019. The 2017 Term Loan matures in December 2019. Amounts repaid under the 2017 Term Loan may not be re-borrowed, and early repayments under the 2017 Term Loan are subject to early repayment fees.
The 2017 Term Loan is guaranteed by Petrogas Petrol Gaz ve Petrokimya Urunleri Insaat Sanayi ve Ticaret A.S. (“Petrogas”), Amity Oil International Pty Ltd (“Amity”), Talon Exploration, Ltd. (“Talon Exploration”), DMLP, Ltd. (“DMLP”), and TransAtlantic Turkey, Ltd. (“TransAtlantic Turkey”) (collectively, the “Guarantors”). Each of the Guarantors is a wholly-owned subsidiary of the Company.
The 2017 Term Loan contains standard prohibitions on the activities of TEMI as the borrower, including prohibitions on encumbering or creating restrictions or limitations on all or a part of its assets, revenues, or properties, giving guaranties or sureties, selling assets or transferring revenues, dissolving, liquidating, merging, or consolidating, incurring additional debt, paying dividends, making certain investments, undergoing a change of control, and other similar matters. In addition, the 2017 Term Loan prohibits Amity, Talon Exploration, DMLP, and Transatlantic Turkey from incurring additional debt. An event of default under the 2017 Term Loan includes, among other events, failure to pay principal or interest when due, breach of certain covenants, representations, warranties, and obligations, bankruptcy or insolvency, and the occurrence of a material adverse effect.
The 2017 Term Loan will be secured by a pledge of (i) the stock of TEMI, DMLP, TransAtlantic Turkey, and Talon Exploration, (ii) substantially all of the assets of TEMI, (iii) certain real estate owned by Petrogas, (iv) the Gundem real estate and Muratli real estate owned by Gundem Turizm Yatirim ve Isletmeleri A.S. (“Gundem”), (v) certain Diyarbakir real estate owned 80% by N. Malone Mitchell 3rd and 20% Selami Erdem Uras, and (vi) certain Ankara real estate owned 50% by Mr. Uras. In addition, TEMI will assign its Turkish collection accounts and its receivables from the sale of oil to the Lender as additional security for the 2017 Term Loan. Gundem is beneficially owned by Mr. Mitchell, his adult children, and Mr. Uras. Mr. Mitchell is the Company’s Chief Executive Officer and Chairman of the Board. Mr. Uras is the Company’s Vice President, Turkey. The Company is working with the Lender to enter into certain pledges and assignment agreements with the shareholders of Gundem, Mr. Mitchell, and Mr. Uras.
Pledge Fee Agreements. In connection with the pledge of the Ankara real estate to the Lender as collateral for the 2017 Term Loan, on November 28, 2017, the Company entered into a pledge fee agreement with Mr. Uras (the “Uras Pledge Fee Agreement”) to which the Company will pay
Mr. Uras a fee equal to 5% per annum of the collateral value of the Ankara real estate. to the Uras Pledge Fee Agreement, the Ankara real estate has a deemed collateral value of $5.2 million.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K under the heading DenizBank Credit Facility and 2017 Term Loan is incorporated herein by reference.
Item 7.01Regulation FD Disclosure.
On November 29, 2017, the Company issued a press release announcing the launch of a new drilling program, its entry into the 2017 Term Loan and the Uras Pledge Fee Agreement, and the decision to pay the upcoming quarterly dividends on the Company’s 12.0% Series A Convertible Redeemable Preferred Shares in cash.A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information in Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference to Item 7.01 of this Current Report on Form 8-K in such a filing.
Item 9.01Financial Statements and Exhibits.
(d) Exhibits.
TRANSATLANTIC PETROLEUM LTD. ExhibitEX-99.1 2 tat-ex991_6.htm EX-99.1 tat-ex991_6.htm Exhibit 99.1 TransAtlantic Petroleum Announces New Drilling Program,…To view the full exhibit click here
About TRANSATLANTIC PETROLEUM LTD. (TSE:TNP)
TransAtlantic Petroleum Ltd. is a holding company. The Company is an international oil and natural gas company engaged in acquisition, exploration, development and production. Its segments include Turkey and Bulgaria. The Company holds interests in approximately 880,000 and 567,000 net acres of developed and undeveloped oil and natural gas properties in Turkey and Bulgaria, respectively. The Company holds interests in over 20 onshore and offshore exploration licenses and approximately 25 onshore production leases covering a total of over 1.4 million gross acres in Turkey. All of its oil production is concentrated in southeastern Turkey, primarily in the Arpatepe, Bahar, Goksu and Selmo oil fields, and its natural gas production is concentrated in the Thrace Basin, which is located in northwestern Turkey near Istanbul. The Company holds interests in an onshore exploration license and an onshore production concession covering a total of approximately 567,110 acres in Bulgaria.