Premier Oil agrees refinancing terms with some bondholders

Premier Oil announced on Wednesday that amended terms to its $245m convertible bonds had been agreed with all members of an ad hoc committee of convertible bondholders.

The London-listed firm said the terms also had the approval of the coordinating committee of the RCF Group and representatives of the other private lenders.

It said the key amended terms included the extension of the maturity date to 31 May 2022; and the retention of the interest rate at 2.5%, to be paid - at the election of the company - either in new shares, or from the proceeds of sale of new shares or in cash.

They also included the conversion price being reset at a premium of 20% to the higher of the volume weighted average price of Premier's shares over the period from Wednesday to 22 March 2017 inclusive, or 62p; equity warrants representing 3% of Premier's issued share capital - enlarged for the issue of equity warrants under the terms of the overall refinancing - at a price of 42.75 pence/share; no cash amendment fee; and the issuer right to require conversion at the conversion price at any time after one year if the value of Premier's shares is at least 140% of the conversion price for 25 consecutive dealing days.

“All seven members of the ad hoc committee, representing 47% of the convertible bonds, have now locked up to the above terms,” Premier Oil’s board confirmed in a statement.

“Following this announcement, convertible bondholders outside the ad hoc committee are encouraged to contact Moelis & Company, as financial advisers to the committee, in order to lock up to the terms in respect of their holding.

“The lock up to the convertible bond terms will become effective on completion of the private lender lock up process.”

On locking up holders representing 50% of the convertible bonds, Premier said it will seek to implement the amendment of terms by way of extraordinary resolution at a meeting of convertible bondholders.

All convertible bondholders will receive equity warrants if the extraordinary resolution is passed.

In the event that the extraordinary resolution fails and Premier has to implement the amendments through an alternative mechanism, equity warrants will only be issued to convertible bondholders who have locked up prior to the meeting, the board explained.

“If holders of at least 50% of the convertible bonds do not lock up, Premier's intention is to implement amendments to the convertible bonds via an alternative mechanism and on terms that will be materially less advantageous for convertible bondholders.”