Eastern Gas Signs Term Sheet for $10M R&D Tax Loan to Fund Exploration
Key Takeaways
- EGA has signed a non-binding term sheet with RiverFort Global Capital for a proposed R&D loan facility of up to A$10 million, structured to bridge the gap between eligible R&D expenditure and receipt of government tax incentive refunds.
- The initial drawdown is capped at A$1.5 million and remains subject to R&D tax incentive position review and approvals — the full A$10 million is not immediately accessible.
- Each drawdown carries a 9% fixed interest rate plus a 5% implementation fee and a 2% introducer fee, meaning the effective cost of capital is materially higher than the headline rate alone suggests.
- EGA would issue unlisted options to RiverFort with each drawdown, priced at a 40% premium to the prevailing five-day VWAP, with the first tranche targeted on or around 15 December 2026.
- EGA has not yet registered its R&D activities or received formal eligibility confirmation — any refund entitlement remains unassessed, making the security underpinning the facility still uncertain.
EGA signs term sheet for proposed A$10 million R&D loan facility
Eastern Gas Corporation (ASX: EGA) has signed an indicative, non-binding term sheet with RiverFort Global Capital Ltd for a proposed R&D loan facility of up to A$10 million. The proposed facility is designed to provide the company with access to working capital ahead of receiving R&D tax incentive refunds from the relevant authorities, bridging the gap between incurring eligible expenditure and collecting the cash refund.
This is a meaningful step forward for EGA, but readers should note clearly: the term sheet is non-binding (except for specified provisions covering due diligence, confidentiality, and jurisdiction), and the facility remains subject to negotiation and execution of definitive documentation.
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Proposed facility terms at a glance
Under the proposed structure, each drawdown would carry a 12-month term, with repayment due within five working days of receiving the relevant R&D tax incentive refund and, in any event, no later than the maturity date. The key commercial terms are as follows:
- Each drawdown term: 12 months
- Repayment triggered within five working days of receiving the relevant R&D tax incentive refund
- Fixed interest rate: 9%
- Implementation fee: 5% of each drawdown (deducted from proceeds)
- Due diligence fee: A$10,000 (excl. VAT); Legal fee: A$12,500 (excl. VAT)
- Introducer fee: 2% of each drawdown (cash, payable to Spark Plus)
- Security: first-ranking security interest over R&D rebate receivables
| Term | Detail | Notes |
|---|---|---|
| Facility size | Up to A$10 million | Further drawdowns subject to mutual agreement |
| Initial drawdown | Up to A$1.5 million | Subject to R&D tax incentive position review and approvals |
| Availability period | Three years from execution | Commences upon execution of definitive documentation |
| Interest rate | 9% fixed | Plus fees and unlisted options per drawdown |
| Repayment trigger | Within five working days of R&D refund receipt | Repayable in full by maturity date regardless of refund timing |
Options issued to the investor
In connection with each drawdown, EGA would issue unlisted options to the investor. The number of options per tranche equals 30% of the relevant drawdown amount divided by the Reference Price, which is defined as the five-day volume-weighted average price (VWAP) of EGA shares preceding the relevant drawdown. Because the Reference Price is not yet known, the exact number of options cannot be determined at this stage.
The options would be exercisable at a 40% premium to the applicable Reference Price and are proposed to expire on 30 September 2029. The first tranche is targeted for issuance on or around 15 December 2026, if the facility proceeds. No options have been issued as of the announcement date.
EGA intends to issue the options within its available placement capacity under ASX Listing Rule 7.1. If sufficient capacity is not available at the relevant time, shareholder approval would be required. Separately, the term sheet contemplates that the investor would hold a right of first refusal on structured, bridge lending, R&D and equity-linked debt or prepayment transactions for six months ending on the later of the definitive agreement date and the date all outstanding amounts are repaid. This right of first refusal would not prevent EGA from conducting straight equity placements.
Understanding R&D tax incentive financing — and why it matters for EGA
The Australian Government’s R&D tax incentive programme allows eligible companies to claim a cash refund from the relevant authorities for a portion of their qualifying R&D expenditure. The catch is timing: the refund is paid after the company lodges its annual tax return, generally within six weeks of lodgment. For an exploration-stage company, that lag between spending on R&D-eligible activities and receiving the cash back can create a real working capital pressure.
An R&D loan facility addresses this directly. The company borrows against the future refund receivable now, rather than waiting, with security taken over that receivable. As funds come in from the relevant authorities, they service the loan.
For EGA, an east coast natural gas exploration company progressing tenements in Queensland’s Surat Basin and Cooper Basin, managing working capital while advancing R&D-eligible field activities is a practical challenge. The proposed facility is designed to provide a structured mechanism to address it.
One important nuance: EGA has received advice in relation to its eligibility for R&D tax incentives but has not yet registered its R&D activities or received a formal assessment. Any entitlement to a refund remains subject to the company satisfying the applicable eligibility requirements, registering activities, and assessment by the relevant authorities. The timing and amount of any refund are therefore uncertain.
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Management commentary and next steps
David Spring, Managing Director
“Signing this indicative term sheet represents a step towards establishing an additional funding source secured against the Company’s R&D tax incentive receivables.”
“If finalised, the proposed Facility would provide us with greater flexibility to access funding ahead of receiving the relevant R&D tax incentive refunds.”
Spring also noted that the proposed facility and initial drawdown remain subject to the negotiation and execution of definitive documentation, and that each drawdown would be repayable by its applicable maturity date irrespective of the timing of any R&D tax incentive refund.
The key next steps before the facility becomes operational are:
- Negotiation and execution of definitive documentation is required before the facility is live
- Initial drawdown of up to A$1.5 million is subject to R&D tax incentive position review and approvals
- First options tranche is targeted on or around 15 December 2026, if the facility proceeds
- EGA will make a further ASX disclosure upon execution of definitive documentation
- The investor holds a right of first refusal on structured and equity-linked finance for six months (as described above); this does not prevent straight equity placements
EGA’s broader focus remains east coast natural gas exploration across its tenements in Queensland’s Surat Basin and Cooper Basin, with the company working to progress its gas resources toward commercialisation. Sustained access to working capital is a practical enabler of that longer-term pathway.
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