Le Lézard
Classified in: Oil industry, Business
Subjects: ACC, SHA

ARCM's Response to Premier Oil's Proposed Scheme of Arrangement - ARCM Opposes Scheme


LONDON, Jan. 7, 2020 /PRNewswire/ -- ARCM notes Premier Oil's announcement regarding the proposal for a scheme of arrangement to extend the debt maturity and approve certain acquisitions. As the Company's largest creditor, holding more than 15% across the Company's debt instruments with blocking positions in two of them, ARCM will take all steps to oppose the Company's proposal and will vigorously contest any attempt to implement such proposal via a scheme of arrangement.  

ARCM is deeply concerned about Premier Oil's intention to pursue acquisitions as stated in its announcement, as they will only serve to increase risk for stakeholders. Premier Oil's balance sheet is already highly levered, and the Company is facing an impending May 2021 maturity of $2.55 billion of net debt as of the 2019 mid-year financials (comprising of $2.2 billion of "accounting net debt" and $371 million of letters of credit). Through its announcement this morning, whereby the Company is seeking an extension through a court supervised Scheme of Arrangement, it appears to be acknowledging that it cannot repay the outstanding debt in accordance with its terms.

ARCM believes that management's immediate priority should be on transactions that facilitate a significant deleveraging of the Company's highly levered balance sheet, so that it may meet the debt maturities that its creditors have already extended once in the 2017 restructuring - as opposed to pursuing acquisitions that expose the Company's balance sheet to significant incremental risks. 

As such, ARCM will take all steps to oppose the Company's proposal and will vigorously contest any attempt to implement such proposal via a scheme of arrangement. 

We are particularly concerned about the following developments:

1)  Cost and quantum of debt and decommissioning liabilities

2)  Increasing the Company's exposure to the UK gas market and transitioning Premier to becoming a gas producer

3)  Inability to access the RBL lending market and exit of long-term creditors

ARCM has articulated these concerns to the Company and has put forward an alternative proposal which would significantly reduce leverage and provide a stable balance sheet, from which the Company could then prudently pursue further acquisitions.

ARCM, and its financial advisers Moelis & Company, remain willing to openly discuss the issues summarized above, in addition to sensible alternative deleveraging options, with the Company, the Creditors (including those creditors who have purportedly already agreed to vote in favour of the Company's proposal) and other stakeholders.

For media enquiries, please contact:

Greenbrook Communications
[email protected]  
+44 207 952 2000

 

 

 

 


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