12 April 2024
Coro Energy
Plc
("Coro"
or the "Company")
Receipt of Eurobond
Standstill Letter and Corporate Update
Coro Energy PLC, the South East
Asian energy company with a natural gas and clean energy portfolio,
announces receipt of a letter from a group of its Eurobond lenders
granting a standstill in respect of the Company's Luxembourg listed
Eurobonds due to mature on 12 April 2024. The Company, which
confirms it is in constructive discussions with
those lenders, also provides an update
across the business.
James Parsons, Executive Chairman of Coro,
commented:
"I am pleased to announce the stand still
arrangement with our Eurobond lenders as we continue to work
towards a broader debt restructuring solution that structurally
solves Coro's capital structure whilst providing funding for our
renewables deployment and the business more
generally.
In the
meantime, the company continues to make excellent progress across
its portfolio, with long awaited important milestones approaching
at Duyung and continued material developments in our renewables
across both the Philippines and Vietnam. I view the award of
a second WESC in the Philippines and the completion of the first
ten sites with MWG in Vietnam as critical steps towards the
delivery of material cashflows from the renewables
portfolio."
Eurobond Standstill
Letter
The Company announces receipt of a
letter from two lenders holding 68% of the Company's
Luxembourg listed Eurobonds which are currently due to expire on 12 April 2024
(the "Standstill"). The Standstill, which the Company is advised is
binding on the parties, provides a conditional standstill on the
repayment of the Company's current debt obligations on expiry
whilst the ongoing constructive discussions with the Company in
respect of the Eurobonds continue and whilst certain inflexion
points in the business materialise, including the outcome of the
Duyung Operator's farm out process.
The outstanding balance of the
Eurobonds, including rolled up coupon, is US$29.3 million at 12
April 2024. The Company is working on a broader debt restructuring,
which it intends to formally propose to all Eurobond holders and
shareholders in due course. The Standstill conditions include a
requirement for lender consent on material capex spend during the
period of the standstill together with requirements for the
provision of certain information and the appointment of a financial
advisor nominated by the noteholders to provide advice to the Board
and the lenders. During the course of the Standstill, the
Company will work with the lenders and the financial advisor
reviewing the existing arrangements and working towards a permanent
debt restructuring solution for the business. The Company
cautions that, notwithstanding constructive discussions to-date and
the agreement of this Standstill, noteholders could withdraw the
Standstill at any time which would result in the Company triggering
a default.
Duyung PSC
The Company notes recent
progress by Conrad Asia Energy Ltd (the
"Operator") at the Duyung PSC, including
ministerial approval of the gas price and volume allocation, the
completion of front end engineering design ("FEED"), the signature
of Heads of Terms for a long-term Gas Sales Agreement ("GSA")
with Sembcorp Gas Pte. Ltd and the
agreement of binding key terms for the sale of domestic gas
volumes.
The Company awaits signature of a
binding GSA, finalisation of documentation to access
the West Natuna Transportation System for the
transportation of gas to Singapore, and the results of the
Operator's farm down process, in respect of which Coro has tag and
drag along rights. The Company is looking to move to final
investment decision once these items are complete, which is
potentially later this calendar year. In anticipation of this, the
Company is finalising contractual arrangements with a specialist,
London-based, E&P financial advisor to assist procuring a debt
solution for its element of the required development
capital.
Shareholders are reminded that the
Company has a 15% non-operated interest in the Duyung Production
Sharing Contract ("PSC"), offshore Indonesia. The Operator
commissioned an updated reserves and resources report prepared by
GaffneyCline Associates in March 2024, which highlights
a Best Case scenario of 36.6 Bcf net
entitlement 2C resources to Coro during the PSC
life.
Philippines Utility Scale Solar and
Wind
The Company is currently focused on four
development stage renewables projects in the Municipality of Oslob
in the province of Cebu, Philippines: a 100MW onshore wind project,
which already has an approved Wind Energy Service Contract
("WESC"); a 100MW onshore solar project where an application for a
service contract is expected shortly; and two further 100MW onshore
wind projects, one of which is already in
the final stages of the WESC application process. The Philippines
portfolio is therefore currently a total of 400MW with all four
projects being co-located, sharing a grid connection and benefiting
from the 130 metre high meteorological ("met") mast which is
collecting bankable data that will cover all three wind projects.
The Company believes further utility scale projects are available
in the province of Cebu.
The Philippines has an abundance of
solar and wind potential, which, when combined with accelerating
energy demand and a foreign investor friendly legal framework,
makes it an ideal country for the Company's utility scale
investments.
The Company has an entitlement to
88% of the future dividends from the Philippine projects and
is strategically looking to develop all four
projects to Ready to Build status and then selectively monetise
and/or farm down the projects to fund construction.
Vietnam C&I Rooftop
Solar
The Company has a producing 3-megawatt pilot
project consisting of over 4,500 solar panels and other ancillary
components that has been installed across four factory roofs in
Vietnam and cover a total area of 16,120 square metres. This
project delivers electrical power that is being consumed on site by
Phong Phu Corporation, one of Vietnam's premier textile
manufacturers under a 25-year power purchase agreement, and is
expected, at current pricing levels, to produce net cash flows to
the Company of approximately $0.3m per annum.
The Company also has a
Memorandum of Understanding ("MoU") with Mobile
World Investment Corporation ("MWG") in Vietnam to install rooftop
solar systems across their Vietnamese portfolio.
Mobile World Investment Corporation is a white
goods and consumer electronics retailer company listed in Vietnam
that operates at 3,600 locations across Vietnam with the potential
to install 360MW of rooftop solar across all locations. The MoU
grants Coro exclusivity on an initial 900 company sites (estimated
at 50MW of rooftop solar capacity) in the central and southern
regions of Vietnam, where solar irradiation is the highest in the
country. Coro will build, own, and operate each rooftop solar
system and sell all generated electricity directly to each Mobile
World Investment Corporation location under a 14-year Power
Purchase Agreement, extendable in certain circumstances, with
variable pricing and a floor price of US 11.2 cents/kilowatt
hour.
The Company recently signed, as a
pilot under the MoU, a binding 14-year power purchase agreement
with MWG to deliver power at the first ten sites as a pilot phase
with a capacity of 430kw. Construction is currently underway. The
PPA term is extendable in certain circumstances and includes a
variable price with a floor of circa US$11.2 cents/kilowatt hour.
The capital required for this pilot phase is expected to be funded
from existing in-country Company resources and from a debt facility
expected to be provided by HDBank, who have now, in addition to
their previously announced non-binding commitment letter, provided
an indicative offer letter. The offer letter, which remains
non binding but is expected to become binding following signature
of the EPC contract, provides credit facilities for 8 years at a
12% variable interest rate in respect of the pilot locations. On
successful commissioning of the ten pilot sites, the Company will
review the learnings from the pilot stage and initiate the
full-scale rollout targeting all 900 MWG
locations.
The Company's strategy is to proceed
with the MWG transaction at pace, utilising local debt where
possible, with a view to generating cash flows from the
rooftop solar portfolio.
Given the scale and compelling
economics of the MWG transaction, the Company has elected not
to proceed with the acquisition of a
rooftop solar portfolio from the shareholders of KIMY Trading and
Service JSC ("KIMY") as previously announced on 25 November 2022,
29 March 2023 and 15 June 2023.
Balance Sheet
As stated, the Company,
is in constructive discussions with the Eurobond
lenders and is exploring multiple funding solutions for its
Vietnamese and Philippine renewables deployment, including the MWG
rooftop solar project under construction in Vietnam and ongoing
working capital. To provide additional funding flexibility the
Company would encourage shareholders to vote favourably in respect
of the resolutions proposed in the forthcoming AGM. In the
meantime, the Company continues to manage its cost base and working
capital carefully.