Lagos — The circumstance and identities of those that led the indigenous gas producer and supplier Seven Energy International Limited filing for bankruptcy about two years ago have emerged.
In 2017, the leading integrated gas company was unable to fulfill payments on two senior secured notes issued by one of its subsidiaries Seven Energy Finance Limited.
The company had blamed its inability to meet its debt obligations on two reasons – the closure of the Forcados export terminal which led to a loss in cash flow, and power stations that could not pay for the gas it had supplied.
Until now, the identities of the power stations that took gas from the firm without paying were wrapped in secrecy.
Findings by SweetcrudeReports showed that Seven Energy went bankrupt on account of debts owed by the Niger Delta Power Holding Company, NDPHC, and the Akwa Ibom State government-owned Ibom Power.
Investigations revealed that Ibom Power received 24 million standard cubic feet per day, MMscf/d, of gas, but could not pay for supplies, resulting in accumulated debts on Seven Energy.
NDPHC, which had a contract to receive over 40 MMscf/d to run the Federal Government-owned Calabar IPP plant, was also unable to pay for gas supplies for many months, resulting in huge cash loss for the natural gas producer and supplier.
Due to this, Seven Energy defaulted on a $445 million loan taken from a consortium of banks led by Ecobank, FCMB, and Union Bank in 2015 to provide working capital for Accugas, one of its subsidiaries.
This, in turn, led to the company’s inability to pay banks and other financial institutions that bought the its secured notes.
According to a news posted on the company’s website, Seven Energy said it is discussing with Savannah Petroleum Plc and the group’s lenders, including an ad hoc group of holders of the $300,000,000 ten percent senior secured notes due 2021 and the $100,000,000 ten and half percent notes due 2021, as part of the comprehensive capital restructuring of the group.
Senior secured notes are debt securities, or bonds, that take precedence over other unsecured notes in the event of bankruptcy. Senior notes must be paid first if assets are available in the event of a company’s liquidation.
An inside source with NDPHC, who pleaded anonymity, told SweetcrudeReports that the company honoured the terms of the contract with the defund Seven Energy.
“I am sure Seven Energy and Savannah Petroleum will resolve all issues with operation of Seven Energy before they conclude their deal. We are not part of the acquisition talks”, the source said.
Further findings revealed that Savannah Petroleum acquired the assets and liabilities of the defunct Seven Energy, although sources inside Savannah hinted that both Ibom Power and NDPHC are yet to pay their debts.
“We have a good relationship with both Ibom Power and NDPHC”, one of the sources inside Savannah Petroleum said.
“We have continued to engage the two companies over the debt and are optimistic that they will fulfill their obligations. The terms of the debt remain as they are”, another source added.