TIDMPMO
RNS Number : 9622V
Premier Oil PLC
03 February 2017
This announcement has been determined to contain inside
information
PREMIER OIL PLC
("Premier" or "the Group")
Announcement of the proposed refinancing
3 February 2017
Premier is pleased to announce:
- Agreement of representatives of its Private Lenders to a long
form term sheet, subject to credit approvals
- Agreement of revised key terms between Premier and
representatives of its convertible bondholders, subject to
agreement by the Private Lenders
- Proposed amended terms to its retail bonds
Refinancing overview
The refinancing will provide a solid foundation for Premier to
deliver its strategic plans through:
- Preserving the Group's debt facilities
- Resetting financial covenant headroom
- Extending Premier's debt maturities to 2021 and beyond
In return, the lenders will receive a revised security and
covenant package, enhanced economics and certain governance
controls.
The long form term sheet will now be circulated to the lenders
under the company's RCF, term loan, Schuldschein and US Private
Placement notes (Private Lenders) for formal credit committee
approval, with lock-up agreements requested by the end of February.
Revised financing documentation will now be finalised with
completion of the refinancing currently anticipated by the end of
May 2017.
Revised funding structure allows for debt reduction and
growth
Year-to-date Premier's production has averaged around 80 kboepd.
A significant step up in production is expected once Catcher is
on-stream later this year, materially enhancing the Group's cash
flows. The Group will prioritise these cash flows towards reducing
its absolute debt levels and leverage ratio to 3x EBITDA. At the
same time, Premier and its lenders envisage that the Group will
selectively seek to invest in its unsanctioned projects, at the
appropriate equity levels, with due regard to the commodity price
environment.
With rising production and 700 mmboe of discovered but
undeveloped reserves and resources, Premier has considerable
portfolio optionality. Unsanctioned projects include infill
drilling programmes, incremental developments and new projects such
as Tolmount, Tuna and Sea Lion. Premier also has the potential for
material value creation through its exploration acreage, including
in Mexico, with drilling expected to commence in Q2.
Tony Durrant, CEO, commented
"The agreement of the long form term sheet with representatives
of our Private Lenders marks a significant milestone for Premier.
We are grateful for our lenders' continued support, which reflects
the high quality nature of our asset base, the strong recent
operating performance and our plans to deliver value for all of our
stakeholders."
Enquiries
Premier Oil plc Tel: 020 7730 1111
Tony Durrant (CEO), Richard
Rose (Finance Director)
Bell Pottinger Tel: 020 3772 2500
Lorna Cobbett, Henry Lerwill
Key terms of the refinancing
The RCF, term loan, US Private Placement notes (USPP) and
Schuldschein notes
Proposed amendments have been agreed with the Coordinating
Committee of the RCF Group and representatives of the other Private
Lenders as follows:
- Confirmation of total existing facilities of US$3.9bn with undrawn capacity preserved
- Alignment of final maturity dates to 31 May 2021
- Amendment of Premier's financial covenants, currently anticipated to be
-- Net debt to EBITDA cover ratio reset to 7.5x until end 2017
reducing to 5.0x at the end of 2018, before returning to 3.0x in
2019
-- Interest cover ratio reduced to 1.85x before increasing to 3.0x in 2019
-- Covenant net debt (which includes issued letters of credit)
to be less than US$2.95bn by end 2018
- Enhanced economics to lenders, including
-- A margin uplift of 1.5% over existing pricing with an
additional 1.0% for the Schuldschein lenders for conversion of
their existing bilateral facilities into an English law syndicated
facility
-- Amendment fees of 1.0% with an additional 0.5% for the Schuldschein lenders
-- Equity warrants representing up to 90 million new shares,
being 15% of Premier's issued shares (enlarged for the potential
new issue) at a price of 42.75 pence per share, equivalent to 7.6%
dilution based on the latest closing share price. The warrants will
have a five-year term. Alternatively, lenders will have the option
to take up synthetic warrants in the form of a deferred fee of
comparable value to the equity warrants. Take up of the synthetic
warrants will reduce the number of underlying new shares to be
issued under the equity warrants
-- Crystallisation of the make-whole on the USPP to be
calculated at the completion date of the refinancing
- A security package which provides priority over unsecured
creditors; in addition a portion of the RCF and certain other debt
obligations of up to US$800m will receive super senior status
- Certain governance controls including
-- Annual approval of Premier's overall capex and exploration budgets
-- Final sanction of significant new projects
-- Certain approval rights in respect of acquisitions and disposals
The retail bonds
Substantially the same economic terms are being offered to the
retail bondholders as to the Private Lenders. The key terms
proposed are:
- Maturity date extended by six months to 31 May 2021
- Enhanced economics comprising an interest rate uplift of
1.50%, amendment fees of 1.0% and pro rata participation in the
warrant offering as above
- Participation in the security package which gives priority
over unsecured creditors, ranking alongside the private debt
facilities (with senior status)
Positive feedback has been received from a number of significant
retail bondholders who have been consulted on these terms. A
prospectus will be issued for retail bondholders to elect between
equity warrants and synthetic warrants.
Convertible bonds
Premier has agreed key amended terms with certain significant
bondholders and advisers to an ad hoc committee of the convertible
bondholders. Full details of these terms will be circulated to the
wider convertible group. The amended terms remain subject to review
and agreement by the Private Lenders and their representatives.
Implementation of the proposed refinancing
Premier plans to enter into lock up agreements in relation to
the long form term sheet with Private Lenders by the end of
February. Revised refinancing and implementation documents will now
be finalised with completion for the refinancing anticipated by the
end of May 2017.
The proposed RCF, term loan and USPP amendments will be effected
through a Scottish scheme of arrangement of each of Premier and
Premier Oil UK Limited (the Schemes), which must be approved by a
majority in number and 75% in value of Scheme creditors attending
and voting at the meetings (the Scheme Meetings).
Schuldschein lenders and the convertible bondholders will each
consent to the terms of the refinancing outside of the Scheme
process.
The refinancing will require shareholder approval in respect of
the potential issue of the warrant shares and shares that could be
issued as a result of the change to the convertible bond conversion
price. That approval will be sought at a general meeting.
Forward Looking Statements
Certain statements in this announcement are forward looking
statements. These forward looking statements can be identified by
the use of forward looking terminology including the terms
"believes", "expects", "estimates", "anticipates", "intends",
"may", "will" or "should" or in each case, their negative, or other
variations or comparable terminology. These forward looking
statements reflect Premier's current expectations concerning future
events. They involve various risks, uncertainties and other factors
which may cause the actual results, performance or achievements of
the Group, third parties or the industry to be materially different
from any future results, performance or achievements expressed or
implied by such forward looking statements. Such risks,
uncertainties and other factors include, amongst other things,
general economic and business conditions, industry trends,
competition, changes in regulation, currency fluctuations, the
Group's ability to recover its reserves or develop new reserves and
to implement expansion plans and achieve cost reductions and
efficiency measures, changes in business strategy or development
and political and economic uncertainty. There can be no assurance
that the results and events contemplated by these forward looking
statements will in fact occur.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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