REG - Coro Energy PLC - Eurobond Standstill Letter & Corporate Update

Coro EnergyAnnouncement

12/04/2024 15:45

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RNS Number : 5007K  Coro Energy PLC  12 April 2024

12 April 2024

 

Coro Energy Plc

("Coro" or the "Company")

 

Receipt of Eurobond Standstill Letter and Corporate Update

 

Coro Energy PLC, the South East Asian energy company with a natural gas and
clean energy portfolio, announces receipt of a letter from a group of its
Eurobond lenders granting a standstill in respect of the Company's Luxembourg
listed Eurobonds due to mature on 12 April 2024. The Company, which confirms
it is in constructive discussions with those lenders, also provides an update
across the business.

 

James Parsons, Executive Chairman of Coro, commented:

"I am pleased to announce the stand still arrangement with our Eurobond
lenders as we continue to work towards a broader debt restructuring solution
that structurally solves Coro's capital structure whilst providing funding for
our renewables deployment and the business more generally.

 

In the meantime, the company continues to make excellent progress across its
portfolio, with long awaited important milestones approaching at Duyung and
continued material developments in our renewables across both the Philippines
and Vietnam.  I view the award of a second WESC in the Philippines and the
completion of the first ten sites with MWG in Vietnam as critical steps
towards the delivery of material cashflows from the renewables portfolio."

 

 

Eurobond Standstill Letter

 

The Company announces receipt of a letter from two lenders holding 68% of the
Company's Luxembourg listed Eurobonds which are currently due to expire on 12
April 2024 (the "Standstill"). The Standstill, which the Company is advised is
binding on the parties, provides a conditional standstill on the repayment of
the Company's current debt obligations on expiry whilst the ongoing
constructive discussions with the Company in respect of the Eurobonds continue
and whilst certain inflexion points in the business materialise, including the
outcome of the Duyung Operator's farm out process.

 

The outstanding balance of the Eurobonds, including rolled up coupon, is
US$29.3 million at 12 April 2024. The Company is working on a broader debt
restructuring, which it intends to formally propose to all Eurobond holders
and shareholders in due course. The Standstill conditions include a
requirement for lender consent on material capex spend during the period of
the standstill together with requirements for the provision of certain
information and the appointment of a financial advisor nominated by the
noteholders to provide advice to the Board and the lenders.  During the
course of the Standstill, the Company will work with the lenders and the
financial advisor reviewing the existing arrangements and working towards a
permanent debt restructuring solution for the business.  The Company cautions
that, notwithstanding constructive discussions to-date and the agreement of
this Standstill, noteholders could withdraw the Standstill at any time which
would result in the Company triggering a default.

 

 

Duyung PSC

 

The Company notes recent progress by Conrad Asia Energy Ltd (the "Operator")
at the Duyung PSC, including ministerial approval of the gas price and volume
allocation, the completion of front end engineering design ("FEED"), the
signature of Heads of Terms for a long-term Gas Sales Agreement ("GSA") with
Sembcorp Gas Pte. Ltd and the agreement of binding key terms for the sale of
domestic gas volumes.

 

The Company awaits signature of a binding GSA, finalisation of documentation
to access the West Natuna Transportation System for the transportation of gas
to Singapore, and the results of the Operator's farm down process, in respect
of which Coro has tag and drag along rights. The Company is looking to move to
final investment decision once these items are complete, which is potentially
later this calendar year. In anticipation of this, the Company is finalising
contractual arrangements with a specialist, London-based, E&P financial
advisor to assist procuring a debt solution for its element of the required
development capital.

 

Shareholders are reminded that the Company has a 15% non-operated interest in
the Duyung Production Sharing Contract ("PSC"), offshore Indonesia. The
Operator commissioned an updated reserves and resources report prepared by
GaffneyCline Associates in March 2024, which highlights a Best Case scenario
of 36.6 Bcf net entitlement 2C resources to Coro during the PSC life.

 

Philippines Utility Scale Solar and Wind

 

The Company is currently focused on four development stage renewables
projects in the Municipality of Oslob in the province of Cebu, Philippines: a
100MW onshore wind project, which already has an approved Wind Energy Service
Contract ("WESC"); a 100MW onshore solar project where an application for a
service contract is expected shortly; and two further 100MW onshore wind
projects, one of which is already in the final stages of the WESC application
process. The Philippines portfolio is therefore currently a total of 400MW
with all four projects being co-located, sharing a grid connection and
benefiting from the 130 metre high meteorological ("met") mast which is
collecting bankable data that will cover all three wind projects. The Company
believes further utility scale projects are available in the province of Cebu.

 

The Philippines has an abundance of solar and wind potential, which, when
combined with accelerating energy demand and a foreign investor friendly legal
framework, makes it an ideal country for the Company's utility scale
investments.

 

The Company has an entitlement to 88% of the future dividends from the
Philippine projects and is strategically looking to develop all four projects
to Ready to Build status and then selectively monetise and/or farm down the
projects to fund construction.

 

Vietnam C&I Rooftop Solar

 

The Company has a producing 3-megawatt pilot project consisting of over 4,500
solar panels and other ancillary components that has been installed across
four factory roofs in Vietnam and cover a total area of 16,120 square metres.
This project delivers electrical power that is being consumed on site by Phong
Phu Corporation, one of Vietnam's premier textile manufacturers under a
25-year power purchase agreement, and is expected, at current pricing levels,
to produce net cash flows to the Company of approximately $0.3m per annum.

 

The Company also has a Memorandum of Understanding ("MoU") with Mobile World
Investment Corporation ("MWG") in Vietnam to install rooftop solar systems
across their Vietnamese portfolio. Mobile World Investment Corporation is a
white goods and consumer electronics retailer company listed in Vietnam that
operates at 3,600 locations across Vietnam with the potential to install 360MW
of rooftop solar across all locations. The MoU grants Coro exclusivity on an
initial 900 company sites (estimated at 50MW of rooftop solar capacity) in the
central and southern regions of Vietnam, where solar irradiation is the
highest in the country. Coro will build, own, and operate each rooftop solar
system and sell all generated electricity directly to each Mobile World
Investment Corporation location under a 14-year Power Purchase Agreement,
extendable in certain circumstances, with variable pricing and a floor price
of US 11.2 cents/kilowatt hour.

 

The Company recently signed, as a pilot under the MoU, a binding 14-year power
purchase agreement with MWG to deliver power at the first ten sites as a pilot
phase with a capacity of 430kw. Construction is currently underway. The PPA
term is extendable in certain circumstances and includes a variable price with
a floor of circa US$11.2 cents/kilowatt hour. The capital required for this
pilot phase is expected to be funded from existing in-country Company
resources and from a debt facility expected to be provided by HDBank, who have
now, in addition to their previously announced non-binding commitment letter,
provided an indicative offer letter.  The offer letter, which remains non
binding but is expected to become binding following signature of the EPC
contract, provides credit facilities for 8 years at a 12% variable interest
rate in respect of the pilot locations. On successful commissioning of the ten
pilot sites, the Company will review the learnings from the pilot stage and
initiate the full-scale rollout targeting all 900 MWG locations.

 

The Company's strategy is to proceed with the MWG transaction at pace,
utilising local debt where possible, with a view to generating  cash flows
from the rooftop solar portfolio.

 

Given the scale and compelling economics of the MWG transaction, the Company
has elected not to  proceed with the acquisition of a rooftop solar portfolio
from the shareholders of KIMY Trading and Service JSC ("KIMY") as previously
announced on 25 November 2022, 29 March 2023 and 15 June 2023.

 

Balance Sheet

 

As stated, the Company, is in constructive discussions with the Eurobond
lenders and is exploring multiple funding solutions for its Vietnamese and
Philippine renewables deployment, including the MWG rooftop solar project
under construction in Vietnam and ongoing working capital. To provide
additional funding flexibility the Company would encourage shareholders to
vote favourably in respect of the resolutions proposed in the forthcoming AGM.
 In the meantime, the Company continues to manage its cost base and working
capital carefully.

 

 

For further information please contact:

 

 Coro Energy plc                                          Via Vigo Consulting Ltd

 James Parsons, Executive Chairman

 Cavendish Capital Markets Limited (Nominated Adviser)    Tel: 44 (0)20 7220 0500

 Adrian Hadden

 Ben Jeynes

 Hybridan LLP (Nominated Broker)                            Tel: 44 (0)20 3764 2341 (tel:(0)20%C2%A03764%202341)

 Claire Louise Noyce

 Gneiss Energy Limited (Financial Advisor)                  Tel: 44 (0)20 3983 9263

 Jon Fitzpatrick

 Doug Rycroft

 Vigo Consulting (IR/PR Advisor)                          Tel: 44 (0)20 7390 0230

 Patrick d'Ancona

 Finlay Thomson

The information contained in this announcement has been reviewed by Leonardo
Salvadori, Coro's Upstream Oil & Gas Adviser, a qualified geologist and
geophysicist and member of the Society of Petroleum Engineers ("SPE").

The volumes included in this announcement are in accordance with 2018
Petroleum Resources Management System ("PRMS") standards sponsored by SPE.

Abbreviations:

1C                 Low Case Contingent Resources

2C                 Best Case Contingent Resources

3C                 High Case Contingent Resources

Bcf                Billion cubic feet

MMscfd     Million standard cubic feet per day

 

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the UK version of the EU
Market Abuse Regulation 596/2014 which is part of UK law by virtue of the
European Union (Withdrawal) Act 2018, as amended and supplemented from time to
time. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.

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