Strike Energy Wins $162M of $217M Financing Package for Perth Basin Projects
Strike Energy has obtained $162 million in credit approval from Macquarie Bank, advancing its $217 million financing package to refinance debt and develop the South Erregulla Power Project.
- Macquarie Bank approves $162 million of $217 million financing package
- Funds to refinance existing debt and support South Erregulla Power Project
- Financing includes $49 million asset facility for gas engine procurement
- Remaining $55 million funding tranches subject to future credit approvals
- Facilities feature long tenors with interest rates linked to BBSY plus margins
Credit Approval Advances Key Energy Development
Strike Energy Limited (ASX: STX) has taken a significant step forward in its capital strategy by securing credit approval from Macquarie Bank for $162 million of its previously announced $217 million financing package. This approval underpins the company’s plans to refinance existing debt and accelerate development of its South Erregulla Power Project in Western Australia’s Perth Basin.
The initial tranche of committed funding includes a $113 million term debt facility and a $49 million asset financing facility. The latter is earmarked specifically for procuring reciprocating gas engines critical to the South Erregulla Power Project’s power generation infrastructure. The term debt facility will cover refinancing, capitalised interest, project development costs, and general working capital needs.
Structured Financing with Future Tranches Pending
While $162 million has received credit approval, the remaining $55 million of the total $217 million package remains subject to further credit approvals by Macquarie. This includes a $15 million asset finance tranche for additional procurement at South Erregulla and a $40 million term debt facility intended to fund development of the West Erregulla gas field. Strike and Macquarie are progressing definitive documentation to finalise the financing arrangements.
The financing terms reflect a balanced approach to risk and flexibility. The debt facility spans 48 months with a maturity in March 2029, carrying an interest rate of BBSY plus 6%, and includes a balloon repayment of $88 million. The asset finance facility extends over 78 months, with an interest rate starting at BBSY plus 7.6% during construction, reducing to BBSY plus 6% during the finance lease period.
Strategic Implications for Strike Energy
This credit approval is a critical enabler for Strike Energy’s growth ambitions in the Perth Basin, providing the financial foundation to advance its power generation and gas production projects. Refinancing existing debt under more favourable terms should improve the company’s capital structure and liquidity profile, while the committed asset financing ensures timely procurement of key equipment.
However, the conditional nature of the remaining tranches introduces an element of uncertainty. Market watchers will be keen to see how swiftly Strike can secure full funding and execute its development plans amid evolving credit conditions. The company’s ability to meet customary covenants and drawdown conditions will also be closely monitored.
Overall, this financing milestone signals confidence from a major financial institution in Strike’s project viability and management capability, potentially enhancing investor sentiment and market positioning.
Bottom Line?
Strike Energy’s partial credit approval marks progress but leaves open questions on full funding and project execution.
Questions in the middle?
- When will Macquarie grant credit approval for the remaining $55 million tranche?
- How will Strike manage project timelines if additional funding is delayed?
- What impact will the financing terms have on Strike’s future cash flow and profitability?
