Echo Energy Announces Publication of Bond Restructuring Proposals

Source: www.gulfoilandgas.com 9/5/2022, Location: South America

Echo Energy, the Latin American focused energy company, announces, further to the Company's announcement of 12 August 2022 and following positive and constructive discussions with certain holders of the Company's Luxembourg listed EUR 20.0m 8.0% secured notes (the "Notes"), that the Company will shortly publish its proposals in respect of a restructuring of the Notes (the "Proposals") and in doing so convene a meeting of the holders of the Notes (the "Noteholders") to consider the Proposals at 10.00 a.m. (London Time) on 28 September 2022 (the "Noteholder Meeting").

Pursuant to the Proposals, the Company is seeking Noteholder consent to:
· Convert 50% of the outstanding principal amount of the Notes, together with accrued interest thereon, into new ordinary shares in the Company ("Ordinary Shares") at a price of 0.45 pence per Ordinary Share;
· Reduce Note interest rate to 2% per annum on any interest on the Notes accruing from 30 September 2022;
· Extend the maturity of the Notes to 15 May 2032 (the "Maturity Date"); and
· Change the minimum denomination of the Notes to EUR 50,000.

If approved by the requisite majority of Noteholders any and all interest on the Notes accruing from 30 September 2022 to 30 September 2024 shall be paid in cash on the Maturity Date save that Noteholders will continue to be provided with the ability, from 30 September 2022, to elect to receive Note interest payments in respect of the immediately preceding quarter in new Ordinary Shares in the Company ("Elections"), subject inter alia to the Company having the required share issuance authorities in place from time to time to satisfy any such Elections and to Noteholders holding at least 50 per cent. of the Notes having made Elections in respect of the relevant quarter. Any new Ordinary Shares issued as a result of Elections will be issued at an effective issue price equal to the volume weighted average price of an Echo ordinary share for the 10 Business Days before the relevant interest conversion date. Any and all interest on the Notes accruing from 30 September 2024 shall be paid in cash at the reduced interest rate of 2% per annum (reduced from 8% per annum) on the last business day of the interest period until the Maturity Date.

The Company is also seeking, subject to Noteholder approval of the Proposals at the Noteholder Meeting, to amend an existing Note covenant that the Company will not, without the prior consent of Noteholders by way of a simple majority of those Noteholders then voting, drill an exploration well with a budgeted cost to the Company of in excess of EUR 5.0 million for so long as the Notes are outstanding (the "Covenant"). The Company is proposing, as part of the Proposals, that the Covenant be amended such that the Covenant will only be in force in the last 18 months prior to the Maturity Date.

Subject to the passing of the Proposals at the Noteholder Meeting, the Company will make a payment to Noteholders of an aggregate cash amount equal to 6% of the total outstanding principal amount of the Notes plus interest accrued on the Notes from 31 December 2019 and until but excluding the Conversion Date payable to Noteholders voting in favour of the Proposals at the Noteholder Meeting pro rata to votes cast at the Noteholder Meeting, to be satisfied by the issue of new Ordinary Shares in the Company at an issue price of price of 0.45 pence per Ordinary Share.

If approved by Noteholders, the Proposals will remain conditional upon the approval by the Company's shareholders at a General Meeting for the authorities to issue the new Ordinary Shares required to be issued in connection with the implementation of the Proposals and the proposed conversion of Company's existing EUR 5.0m 8.0% secured convertible debt facility, details of which were announced by the Company on 12 August 2022.


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