Touchstone’s borrowing base on its Trinidad based credit facility has been established at US$8,000,000 following the lender’s semi-annual borrowing base review. The Company currently has US$2,000,000 drawn on the credit facility, and US$6,000,000 is currently dedicated to the Company’s letter of credit relating to the East Brighton property. Following the finalization of the sale of the property and the cancellation of the letter of credit, the credit facility borrowing base will be reduced to US$3,000,000.
In connection with the borrowing base redetermination, the Company and its lender executed an Amendment and Limited Waiver to the Credit Agreement (the “Waiver”). The Waiver cured the Company’s March 2016 production volume covenant breach, as March production was 1,339 barrels per day while the covenant called for a minimum threshold of 1,350 barrels per day. The Waiver also served to cure the Company’s violation of its December 31, 2015 consolidated debt to EBITDA ratio covenant, which was 3.50 to 1.00 versus the maximum 3.00 to 1.00. This violation was reassessed by the lender as the Company’s previous calculations of total debt did not include the East Brighton letter of credit balance. The Company is expecting to be in compliance with this quarterly covenant throughout 2016 based on US$4,000,000 year to date credit facility payments. In addition, the Waiver amended the credit facility regarding the previously disclosed mandatory April 8, 2016 US$1,000,000 prepayment. If the East Brighton letter of credit is cancelled prior to May 31, 2016, the prepayment is not required. If the East Brighton letter of credit remains outstanding as of May 31, 2016, the Company must make the prepayment on May 31, 2016, and the lender has the right to hold a one-time interim borrowing base redetermination prior to June 21, 2016.
The Company will continue to seek alternative sources of financing to further develop its core Trinidad onshore assets.