Primeline Energy Holdings announces project financing for gas field development

Primeline Energy Holdings Inc. has confirmed the financing for its share of the costs of the LS36-1 gas field development in the southern East China Sea basin.

Primeline and its affiliate company Primeline Petroleum Corp (PPC) secured support from China Development Bank (CDB) for their share of the project cost in May 2010. In November 2012, CDB, Primeline and PPC entered into a revised Loan Memorandum which was approved in principle by CDB's credit committee in January 2013. In May 2014, CDB decided to syndicate the project finance loan.

CDB has now confirmed that it has completed syndication of the loan. The syndicate consists of CDB and China Export and Import Bank (EXIM) as joint lead arrangers and Shanghai Pudong Development Bank (SPDB) as participant and agent bank.

The facility will be made available to Primeline and PPC on a joint borrower basis secured on their respective interests in the project. The facility will be for a total amount of US$274 million (of which the Company's share is US$ 205.5 million) and will be repayable over 9 years at an all-in interest rate of LIBOR+4.7%.

The facility has been approved by the credit committees of all three banks. It is presently intended that the binding loan contract and related security documentation will be finalised, executed and implemented before the middle of December 2014 when a further announcement will be made.

The loan facility is sufficient to cover all of the obligations of Primeline and PPC with respect to the costs of the project to date. The project has been completed with trial production having started in July 2014. The trial production has been progressing well with most of the facilities now fully commissioned and production running smoothly. Confirmation of the production details is expected to be announced soon.Victor Hwang, Chairman and President of Primeline commented:

"We are very pleased to confirm the support of the two main policy banks in China to lead the long term finance of our project. This highlights that although LS36-1 development is a modest project by international standards, it is strategically important to the development of gas reserves and infrastructure in China. We are also pleased with the participation of Shanghai Pudong Development Bank which will provide commercial bank operational support. The development of a production hub in the southern East China Sea basin and Primeline's relationship with these important Chinese financial institutions provides us with a launching pad for the next stage of our rolling development led exploration programme."