Legacy Oil backstops loan for its CEO
2015-03-27 07:04 ET - In the News
The Globe and Mail reports in its Friday edition that Legacy Oil + Gas is backstopping a loan for its chief executive officer. The Globe's Carrie Tait writes that Trent Yanko and his wife bought $5.684-million worth of Legacy shares in a margin account with the Bank of Nova Scotia last summer (all figures Canadian unless otherwise stated). The Yankos exercised 1.75 million warrants, converting them into Legacy shares at a strike price of $3.24 each, on July 17. Legacy's stock closed at $8.53 that day and the benchmark price for oil closed at $103.84 (U.S.) per barrel. The Yankos' debt was "supported by the lending value" of their 3.55 million Legacy shares. By December, however, these shares fell short of Scotiabank's margin requirements. Legacy closed at $2.63 on Dec. 1. This triggered a margin call. Scotiabank gave notice it intended to reduce the original indebtedness by arranging for the sale of the common shares held by the Yankos. The bank said it would refrain from such sales if it received a guarantee from Legacy. Legacy provided the debt repayment guarantee for up to $5.6-million, on Dec. 29. As of Dec. 31, there was $5.1-million owing on the credit facility and subject to Legacy's guarantee.