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Gasol to guarantee US$23mln of associate's debt

Published: 16:31 20 May 2014 AEST

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Gasol (LON:GAS) has agreed to act as guarantor to US$23mln of senior debt issued by 47%-owned associate Afrique Energie Corporation.

The loan notes mature in November this year and carry an interest rate of 20% per annum.

The funding will be used to pursue a number of investments being currently contemplated by AEC, Gasol said.

It announced on Monday it had invested US$1mln for a 31.7% shareholding in AEC alongside an unsecured loan of US$1mln in exchange for a further 20mln shares to take its stake to 47%.

The loan will mature on 13 November. Gasol Upstream, its production division, will be entitled to representation on the AEC’s board.

Gasol Upstream and AEC are working together to develop discovered gas reserves in West Africa, where Gasol’s core operations are based.

Alan Buxton, chief operating officer, said: "We have been impressed with the management team at AEC and we look forward to working with them to source upstream gas assets."

AEC is a private Canadian company that had assets of C$4.46mln at end April comprising cash and prepaid expenses of C$199,500 and goodwill of C$4.26mln. The company posted a net loss for the year to April of C$490,000.

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