16th Jan 2015 09:11
LONDON (Alliance News) - Shares in Afren PLC jumped higher in early trade on Friday following news on Thursday that suitor SEPLAT Petroleum Development Co PLC has secured a refinancing deal which includes an option to increase the facility by GBP700 million to back acquisitions.
Afren and SEPLAT have both confirmed the pair are "highly preliminary" talks over a possible bid for Afren by SEPLAT. They have not revealed any financial details on the talks.
On Thursday, SEPLAT said it had secured a USD1 billion refinancing deal which includes an option to upside the facility by an additional USD700 million for "qualifying acquisition opportunities".
Afren has emerged as a takeover target in the wake of a collapse in its share price in the second half of 2014. Its share price fell by around 70% over the course of 2014, first dragged sharply lower by a payments scandal involving its former chief executive and chief operating officer and then exacerbated by the falling oil price towards the end of the year.
On Monday, Afren shares were nailed to the bottom of the FTSE 250, dropping around 20% to make it the smallest company by market capitalisation in the index. The fall was caused by news the company is considering its options on the Barda Rash field in the Kurdistan region of Kazakhstan following a substantial downgrade to the reserve estimate for the prospect.
In the wake of the share price drop, analyst Edison Investment Research said SEPLAT may revise down any bid it makes for Afren.
Afren shares were up 4.2% to 29.98 pence on Friday morning, one of the best performers in the FTSE 250. The stock had added 21% on Thursday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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