Update on BP Acquisitions and creditor agreementsSource: RNS
Premier Oil plc
("Premier" or "the Group" or "the Company")
Proposed revised terms for the BP acquisitions and agreements with creditors
5 June 2020
· Amended terms for the acquisition of the Andrew Area and Shearwater assets (together, the "BP Acquisitions") agreed in principle
o Cash payable at completion reduced to $210 million
o Estimated revised abandonment obligations reduced to c.$240 million (pre-tax) from c.$600 million (pre-tax)
· Principal terms being discussed with a subset of Premier's creditors to waive the Group's financial covenants through to 30 September and to provide continued access to its revolving credit facilities ("Stable Platform Agreement"); once agreed and finalised, the terms will be put to the wider creditor group for approval
· Settlement agreed with ARCM, the Group's largest creditor, under which:
o ARCM will withdraw its appeal of the Court's judgment approving the Schemes
o ARCM have undertaken to support the BP Acquisitions and the Stable Platform Agreement through the lender consent process
o Premier will issue 82.2 million new shares, representing 8.91 per cent of the enlarged Group, to ARCM at a price of 26.69p/sh, a 9.64 per cent discount to the volume weighted average price over the last five days; the proceeds from which will be used to fund part of the proposed BP acquisitions
Tony Durrant, CEO, commented:
"We are pleased to have agreed revised terms with BP for the proposed acquisition of the Andrew Area and Shearwater assets, which are materially value accretive for the Company. The Stable Platform Agreement, once agreed with and approved by lenders, will provide a basis for the Company to continue discussions regarding proposed amendments to the Group's existing credit facilities."
Premier Oil plc
Tony Durrant, CEO
Richard Rose, Finance Director
Tel: 020 7824 1116
Tel: 020 3757 4983
Revised terms for the BP acquisitions
Premier and BP have confirmed their intention to complete the proposed BP Acquisitions, subject to debt and shareholder approvals, by 30 September 2020. The structure of the consideration and phasing of payments are being adjusted to reflect the material developments in global commodity markets.
Under the proposed revised arrangements, the original consideration of $625 million at the effective date of 1 January 2019 would be set off by approximately $300 million of estimated interim period cash flows to be retained by BP and a further $115 million would only become payable based on higher future oil and gas prices. Revised cash payable at completion of the proposed BP Acquisitions is anticipated to be $210 million and is expected to be funded with equity. In addition, BP would retain 100 per cent of the existing Shearwater abandonment costs and 50 per cent of the existing Andrew Area abandonment costs.
The proposed BP Acquisitions are in line with the Group's stated strategy and will strengthen Premier's business through the addition of operated, low cost, producing assets. The Andrew Area and Shearwater assets, which will contribute to rising Group production, are immediately cash generative even at current commodity prices and will accelerate the use of Premier's $4.1 billion of UK tax losses. The additional free cash flow generation will accelerate debt reduction and the deleveraging of Premier's balance sheet.
While the proposed revised terms of the BP Acquisitions have been agreed in principle, there can be no certainty that the acquisitions will take place in accordance with these terms, nor that any legally binding agreement will be reached.
Stable Platform Agreement
Premier has made good progress in agreeing the principal terms to the "Stable Platform Agreement" with a subset of its creditors representing over 40 per cent of its debt facilities to waive the Company's financial covenants through to 30 September 2020 and to provide continued access to its revolving credit facilities. Once terms are agreed and finalised, Premier will seek formal support from its wider lender group for the Stable Platform Agreement. Discussions continue over the proposed amendments to the Group's existing credit facilities which mature in May 2021.
Asia Research Capital Management
Premier has reached agreement with its largest creditor, Asia Research Capital Management (ARCM), on the following matters:
· In relation to the current creditor schemes of arrangement required to implement the proposed UK North Sea Acquisitions, related funding arrangements and the extension of the Group's credit facilities (the "Schemes"), ARCM has agreed to withdraw its appeal of the Court's judgment approving the Schemes with effect from July. Premier will subsequently register the Schemes but the BP Acquisitions and the acquisition of the additional interest in Tolmount will not proceed on the terms originally envisaged, which in turn means the original amendment and extension of the Group's credit facilities contemplated under the Schemes will not take effect. The agreement with ARCM also provides for a comprehensive settlement of all claims relating to the schemes and related matters (including costs).
· ARCM has undertaken to support the Stable Platform Agreement and the proposed BP Acquisitions. In addition, Premier has agreed to issue 82,164,064 new Premier shares, representing 8.91 per cent of the enlarged Group, to ARCM at a price of 26.69p/sh. This represents a 9.64 per cent discount to the volume weighted average price of Premier's shares over the period from 29 May to 4 June 2020 (inclusive). The issue will raise approximately $27.5 million, the proceeds of which will be used to fund part of the proposed BP Acquisitions and ongoing capital investments. ARCM will use the new shares to reduce its current short position (latest reported being 16.69 per cent).
The placing is conditional upon admission of the new shares. Applications will be made for the new shares to be admitted to the premium listing segment of the Official List of the Financial Conduct Authority and to be admitted to trading on the main market for listed securities of the London Stock Exchange. Admission of the new shares is expected to take place on 10 June 2020. Following admission, the total number of shares of the Company in issue will be 922,028,631 and the total number of voting shares in the Company will be 922,028,631.
· ARCM has undertaken not to add to their equity short position in Premier prior to the completion of agreed amendments to the Group's existing credit facilities
The information contained within this announcement is deemed by Premier to constitute inside information as stipulated under the Market Abuse Regulation. By the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain. The person responsible for arranging for the release of this announcement on behalf of Premier is Andy Gibb (General Counsel).
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