17 March 2015, Lagos – United Kingdom-listed Afren Plc said it had reached an agreement in principle to address its short and longer-term funding needs and recapitalise its capital structure.
The company said in a statement at the weekend that an agreement had been entered into with certain creditors under its 2016 Notes, 2019 Notes and 2020 Notes, as well as a majority of the lenders under its existing $300 million Ebok credit facility.
According to the statement, the agreement was in respect of the key terms of a proposed interim funding and recapitalisation of the group, which is intended to result in the provision of $300 million of net total funding before the end of June 2015.
In connection with a review of its capital structure and alternatives to address its immediate and longer term funding issues, Afren said it had considered a range of proposals and alternatives from both existing stakeholders and third parties.
Following such review, the company has concluded that a transaction with its current creditors offers the best alternative that is capable of being implemented.
Afren has also stated that it has reached a conditional agreement with creditors, representing approximately 42 per cent of the outstanding principal amount due under its 2016 Notes, 2019 Notes and 2020 Notes for the provision of $200 million in net interim funding in the form of a super senior private placement notes (PPN).
By the terms of the agreement, the PPNs are expected to be issued by the end of March 2015. “This interim funding will provide initial liquidity to the group and provide time to implement the required steps towards the completion of the recapitalisation transaction that has been agreed in principle between the Ad Hoc Committee and a majority of its lenders under its existing $300 million Ebok credit facility. The PPN have been pre-placed with certain members of the Ad Hoc Committee. The Ad Hoc Committee, together with lenders representing more than 67 per cent by value of the lenders under the Ebok Facility have also agreed in principle to implement a financial and capital restructuring to secure the Group’s future,” the company said.
The key elements to the recapitalisation include: refinancing of the PPN through the issuance of $321million new high yield notes, which will provide an additional $100 million in net cash proceeds to the group.
The parties also agreed that debt-for-equity swap of 25 per cent of the 2016 Notes, 2019 Notes and 2020 Notes will be converted into equity with the remaining existing Notes being reinstated and extended to 2019 and 2020 at an annual coupon of 9.1 per cent.
Others include extension of the Ebok Facility until 2019, alongside a re-profiling of the amortisation schedule under such facility; issue of new shares to the existing noteholders who subscribe for the PPN and the New Senior Notes and up to $75 million equity offering to all shareholders to provide the opportunity to participate in the recapitalisation and provide additional liquidity to the group.
It is anticipated that the Recapitalisation will be completed by the end of June 2015.
The issue of the PPN and implementation of the recapitalisation are subject to entry into and completion of further documentation and formal approval by the participating creditors, each of the lenders under the Ebok Facility, the lenders under the group’s other secured facilities and the group’s principal joint venture partners.
– This Day