Charisma Energy Services has received a notice letter from its bank stating the failure to make dividend payments and the September instalment payment constituted events of default under the credit agreement, with the loan canceled, the company said in a filing to SGX Thursday.
The company said it has been facing issues repatriating U.S. dollars out of Sri Lanka to repay the monthly loan instalments due to the current economic crisis in the country.
The outstanding principal amount owed to the bank is around US$13.2 million, with the loan secured by a corporate guarantee from Charisma Energy, the first legal charge on the mini-hydro electric power plants in Sri Lanka, legal assignment of the proceeds of those power plants and insurance on those assets, the filing said.
“The group maintained communications with the bank, specifically to seek for forbearance in the meantime as the continued delay in payment of the September instalment is due to the foreign currency crisis in Sri Lanka,” Charisma Energy said. “For the avoidance of doubt, the Sri Lanka bank account has sufficient funds to service the instalments required under the loan. The group remains committed to the exploration of several avenues to remit U.S. dollars, with the view to resume instalment payments by November.”
Charisma Energy said it plans to continue working with the bank to reach an amicable resolution, adding it doesn’t expect the situation will significantly impact the on-going discussion with potential investors and the group’s debt restructuring and recapitalisation.
If an amicable resolution is reached and the bank does not enforce the terms of the agreement, the company directors believe the situation won’t have a significant impact on company operations or result in a cash flow problem, the statement said.
But it added, “in the event the bank enforces the securities under the facility agreement, there may be a significant impact on the operations of the company and may result in the company facing a cash flow problem.”
In addition, Charisma Energy said it has another loan from the bank with an outstanding principal of around US$2.4 million, secured by a pledge on one of its anchor handling tug supply vessels.