Iona Energy plans to sell up to $300 million secured notes via Pareto

By Paul A. Harris

Portland, Ore., June 20 - Iona Energy Inc. announced in a Thursday press release that it intends to sell $250 million to $300 million of callable senior secured bonds.

The bond will be issued by Iona Energy Co. (UK) Ltd., a wholly owned subsidiary of Iona Energy.

Proceeds are expected to be available by early July.

Pareto Securities is the manager and bookrunner.

Proceeds will be used to refinance the Calgary, Alta.-based company's credit facility, of which about $139 million is drawn, to partially retire its existing structured energy derivative transaction, to fund the delivery of its Orlando and Kells projects to first oil, to mature and to accelerate other pipeline development opportunities.

The security package will include a parent company guarantee from Iona, a charge over the shares of the issuer and its subsidiary Iona UK Huntington Ltd., as well as a charge over the issuer's interests in the Huntington, Trent & Tyne, Orlando, Kells and West Wick assets.

"We commenced a rapid ramp-up in production from early Q2 2013 through the start-up of the Huntington field," Neill Carson, Iona's chief executive officer, commented in Thursday's press release.

"While first cargoes have been sold, ramp-up operations continue at Huntington with the recent onset of gas compression, export, and water injection. Strong well and reservoir performance has indicated that ramp up from approximately gross 10,000 barrels per day to full production capacity of gross 30,000 barrels per day and 27 million cubic feet per day is expected to be reached within weeks once the facility gas export systems are fully commissioned.

"This production represents significant cash flow and it is important that we optimize our ability to access this income in order to maintain our production growth and accelerate the development of our portfolio of operated discoveries.

"The proposed bond issue provides Iona with the opportunity to achieve its objectives in this respect."

Iona Energy, which is based in Calgary, Alta., and Aberdeen, Scotland, is an oil and gas exploration, development and production company focused on oil and gas development in the United Kingdom's North Sea.

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