Leed Petroleum reports an amendment to its debt facility and plans to undertake a strategic review.

Details of Amended UniCredit Facility As previously announced, the Company has a fully utilised credit facility with its bank, UniCredit Bank AG comprised of two tranches totaling US$26.25 million, namely a revolving credit line fully utilised at US$25 million (subject to semi annual re-determination) and a term loan tranche of US$1.25 million. On 24 November 2010 following discussions with UniCredit at which the Company disclosed certain technical defaults under the terms of the credit facility (principally relating to historical EBITDA ratios) that exist and that are likely to exist at the 31 December 2010 review date, the Company amended its existing credit facility in exchange for a waiver of the defaults until 31 March 2011.

The principal terms of the amended UniCredit Facility are: • The maximum facility will be US$30 million on 15 December 2010 and thereafter the maximum facility will be reduced by US$6 million semi-annually from 15 June 2011 until the facility expires on 15 June 2014; • The available facility, as in the past, will continue to be the lesser of the maximum facility and the aggregate available commitments comprised of the revolving borrowing base tranche and the term tranche; • The revolving borrowing base tranche has been re-determined and lowered effective as at 15 December 2010 from US$25 million to US$23 million and the US$2 million principal payment which would otherwise be due is deferred until 31 March 2011; • The revolving borrowing base tranche will further reduce by US$10 million on 31 March 2011; • The interest rate on the revolving tranche will increase effective as at 15 December 2010 by 1 per cent. to Libor plus 7.25 per cent. if the loan is greater than or equal to 75 per cent. of the available revolving facility; 6.75 per cent. if the loan is greater than or equal to 50 per cent. of the available revolving facility; and 6.25 per cent. if the loan is less than 50 per cent. of the available revolving facility; • The interest rate on the term tranche will increase effective 15 December 2010 by 1 per cent. to Libor plus 7.75 per cent. and in 2011 to Libor plus 8.0 per cent. in 2011; and • The requirement to hedge at least 50 per cent. of the anticipated production from proved developed producing reserves for the next 24 months was suspended until 31 March 2011 and instead, the Company agreed to hedge an additional 15,600 bbls. of crude oil and 200,000 mmbtu of natural gas during the first calendar quarter of 2011 at a strike price of US$73 per bbl. and US$4 per mmbtu through the purchase of put options which have cost the Company US$134,068.

Strategic Review The Company intends to undertake a strategic review as soon as possible to consider a broad range of strategic alternatives including but not limited to divesting some or all of the Company's oil and natural gas assets, securing a new bank credit facility and / or other potential transactions such as a merger with another company.

Howard Wilson, President and Chief Executive of Leed, commented, “We are currently assessing our options for reducing the Company’s current debt level and formally undertaking a strategic review will mark a positive step in this process. Leed has a high quality asset base and continues to make progress developing our asset portfolio.”

Tags: Leed Petroleum PLC