8th Apr 2015 10:12
LONDON (Alliance News) - Afren PLC Wednesday confirmed that one of its partners has tried to terminate the production sharing and technical service contract covering the Okoro field offshore Nigeria, but said operations continue as normal.
In March, Afren said it had received a notice of breach of the contract from partner AMNI Petroleum Develpment Co after Afren said it was reviewing the group's capital structure and funding requirements. AMNI made the accusation due to the liquidity constraints facing Afren, something that the company rejected.
On Wednesday, Afren reiterated that it "vigorously disputes" the claims made by AMNI and said AMNI is not entitled to terminate the contract. An Afren spokesperson confirmed that while AMNI has attempted to terminate the contract, operations continue at the site as normal.
Afren said it has offered to meet AMNI to "discuss the parties' future collaboration under the production sharing and technical service contract", but did not say whether or not AMNI has taken up the offer.
Afren said operations on the Okoro field continue in line with its expectations and said it is making "good progress" on satisfying the conditions to secure interim funding. Afren is currently in discussions to address its short and longer-term funding needs and recapitalise its capital structure.
The company has already entered into an agreement with some holders of its 2016, 2019 and 2020 notes, and with the majority of its lenders under the company's existing USD300 million Ebok credit facility, to secure interim funding and recapitalise the business. The total net funding under the deals would be USD300 million.
Afren has reached a preliminary agreement with noteholders representing around 42% of the outstanding amount due under the 2016, 2019 and 2020 notes, for the provision of USD200 million in funding in the form of super-senior private placement notes.
The company said the agreement will give it liquidity to give it more time to to "implement the required steps" to complete the recapitalisation with the Ad Hoc Committee and a majority of its lenders under its existing USD300 million Ebok facility. Afren said a deal has already been reached in principle.
The super-senior private placement notes have been pre-placed with certain members of the Ad Hoc Committee and the deal with the Ad Hoc Committee, together with the company's lenders, represent more than 67% by value of the lenders under the Ebok facility. Afren said it will refinance the super-senior private placement notes by issuing USD321 million new high-yield notes, which would provide an additional USD100 million in cash proceeds to Afren.
However, the deal was expected to be completed by the end of March, but has been hit by "minor delays", but Afren reaffirmed Wednesday that the deal will be secured "imminently".
Afren shares are up 0.6% to 3.31 pence per share Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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