CALGARY, ALBERTA - (June 8, 2012) - Canacol Energy Ltd. ("Canacol" or the "Corporation") (TSX:CNE; BVC:CNEC) is pleased to announce that it has entered into an agreement, through a wholly owned subsidiary, for a US$ 200 million credit facility with a syndicate of banks led by Scotiabank as Sole Lead Arranger and Administrative Agent, and including Citibank as Documentation Agent. The initial borrowing base of US$ 85 million under the credit facility, which remains subject to the satisfaction of certain conditions precedent set forth in the credit agreement, consists of a reserve-based revolving facility of US$ 55 million and a term facility of US$ 30 million to replace the Corporation’s existing gas plant credit facility. The revolving facility has a three year term and is subject to re-determination of the borrowing base semi-annually on April 1 and October 1 each year, beginning on October 1, 2012. The borrowing base is determined based on, among other things, the Corporation’s current reserve report, results of operations, the lenders view of the current and forecasted commodity prices and the current economic environment. Advances under the revolving facility bear interest at rates ranging from LIBOR plus 2.50% - 3.25% per annum, depending on utilization. Undrawn amounts under the revolving facility bear a commitment fee of 0.5% per annum. The term facility carries terms that are materially consistent with the Corporation’s current gas plant credit facility and will replace such facility. Plexus Capital, LLC advised the Corporation on the transaction.
As at March 31, 2012, the Corporation had US$ 68.1 million in cash, cash equivalents and restricted cash, and US$ 43.7 million of working capital surplus. The arrangement of the credit facility provides Canacol with additional financial flexibility to pursue business development opportunities.