*Get govt consents
OpeOluwani Akintayo
Lagos — Seven Energy will forfeit some of its assets to British Savannah Petroleum PLC. SweetcrudeReports learnt that Savannah has secured ministerial consent to take over some of Seven Energy International Limited, SEIL’s, assets in Nigeria.
Seven which operates in Nigeria through its wholly-owned subsidiaries, Septa Energy Nigerian and Accugas, is headquartered in Lagos and London.
In a notification document signed by the Department of Petroleum Resources, DPR, and obtained by this newspaper, the transfer of assets, including its entire shares in Seven Uquo Gas Limited and Accugas Limited to Savanah Petroleum has already been assented to by President Muhammadu Buhari.
However, the consent is until after payment of all taxes connected to the transaction has been made within 90 days of the receipt of the approval letter conveying the consent.
In another document by Savanah Petroleum, it said “The receipt of the Consent represents the satisfaction of a significant condition precedent for the Transaction”.
“The principal remaining conditions precedent for the Transaction relate to the execution of long-form documentation in relation to the Accugas debt restructuring and the Frontier Swap, following which the Transaction completion process is expected to commence”.
History of indebtedness
Savannah will now acquire the Seven Assets and the restructuring of Seven Energy’s existing indebtedness, specifically the gas for oil swap with Frontier Oil Limited, buy-out of minority shareholders in Universal Energy Resources Limited, the acquisition of an additional 55-60% interest in Accugas as well as the sale of a 20-25% (less one share) interest in Seven Uquo Gas Limited SUGL and Accugas to African Infrastructure Investment Managers AIIM.As a result, the indigenous oil and gas exploration, development, production and distribution group entered into a transaction for a comprehensive capital restructuring, part of which is to sell most of its assets.
Seven Energy, in a statement in 2017, said Savannah Petroleum would acquire “substantially all of the valuable assets of the group, including, at its option, the Strategic Alliance Agreement, which is to be transferred to Savannah, its subsidiaries, or an entity to be nominated by Savannah, subject to completion of a financial restructuring of the group in accordance with the term sheets.”
It said parties to the agreed transaction included certain members of the group; a United Kingdom oil and gas company, Savannah Petroleum Plc; lenders under the $24.1m term loan facility and lenders under the $25m term loan facility provided to, among others, Seven Energy Finance Limited, its wholly-owned subsidiary.
Others are the holder of the 10.50 percent Senior Secured Notes issued by the company, and an ad hoc group of holders of the 10.25 percent Senior Secured Notes issued by the company holding approximately 40 percent of the total principal amount of the SSNs.
It said new capital would be provided by Savannah with funding available for, among other things, operational working capital and the liquidity needs of the target group; cash consideration to be paid to selected creditors, including the SSN noteholders, and costs associated with the agreed transaction.
As part of the agreement, the SSN noteholders will receive their pro-rata share of $52.5m in newly-issued equity in Savannah and an $87.5m cash payment, in consideration for the discharge of all $318.2m SSNs and release of claims against the entities being acquired by Savannah.
In addition to the SSN consideration, the SSN noteholders will also be offered the right to subscribe, on a pro-rata basis to their holdings of the SSNs, for $25m worth of newly-issued equity in Savannah for a total cash consideration of $20m.
The transaction involved Savanah Energy acquiring Seven Energy’s 40 percent participating interest in Uquo oil and gas field; 62.5 percent interest in Universal Energy Resources Limited, which holds a 51 percent participating interest in Stubb Creek oil and gas field; and interest in Accugas Limited midstream business, a 260km gas pipeline network and associated gas processing infrastructure, potentially in conjunction with certain third-party investors.
However, Savannah will not be acquiring Seven Exploration & Production Limited as part of the agreed transaction.
Savannah had to provide Seven with a “super senior” interim revolving credit facility of up to $20m in order for it to continue to operate its business until the successful completion of the transaction.
Seven Energy, which has been grappling with severe liquidity challenge, has announced its inability to make the interest payment due October 11, 2017 on two notes issued by Seven Energy Finance Limited.
It also announced that it had requested a standstill from its lenders under the $385m Accugas term facility dated June 23, 2015, and had not made payments of interest and principal due on March 31, 2017.
On April 11, 2017, the group failed to pay the interest due on the $300m, 10 ¼ percent SSN due 2021 and the $100m, 10 ½ percent notes due 2021, and did not satisfy the conditions for the payment-in-kind interest.
“The 30-day grace period for payment of interest under the SSNs and the 10½ percent notes expired on May 11, 2017, which represents an event of default under the terms of the SSNs and the 10½ per cent notes,” the group said.
Its liquidity was severely affected by a range of external factors, including loss of material cash flow from its Strategic Alliance Agreement since February 2016 because of recurrent militant activity that resulted in the closure of Forcados export terminal, and a significant backlog of unpaid invoices relating to the supply of gas to federal and state-owned power stations.