15th Jul 2015 07:08
LONDON (Alliance News) - Embattled Afren PLC Wednesday said its shares have been suspended due to "material uncertainty" over its financial position and said it cannot inform the market about its finances until it completes a strategic review.
Afren said the outcome of a review of its business plan is currently clouded by "significant uncertainty", but said it had already "become clear" that production would be "materially lower" than what it informed shareholders in its restructuring proposals in March.
All of the company's production currently comes from its operations in Nigeria.
"Afren is unable to assess accurately its financial position and inform the market accordingly at this stage, and therefore the company has requested the suspension of trading in its shares. A further update will be provided to the market as soon as practicable," said the company in a statement.
In March, Afren 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 following a torrid year plagued by unauthorised payments by former board members, the oil price crash and a lack of liquidity.
The proposed restructuring comprises of implementing a scheme of arrangement for its existing loan notes, which will include issuing USD369 million of new high yield notes due in 2017 to refinance and repay existing securities, providing USD148 million in proceeds.
Afren would also convert USD234 million of existing loan notes, made up of 25% loan notes due in 2016, 2019 and 2020 into new shares in the company, which would represent 80% of the existing share capital of Afren.
The remainder of the existing notes will be cancelled and reissued in equal amounts of USD350 million each, due December 2019 and December 2020 respectively, both with an annual interest rate of 9.1%.
Afren also wants to issue new shares, equal to 50% of the share capital following the restructuring of the loan notes, to the holders of those loan notes. That comprises of issuing GBP49.2 million worth of new shares through an open offer at 1.0 pence per share. That represents a 46.5% discount to the closing price on Thursday.
The company would issue additional shares, equal to 10% of the issued share capital after the loan note restructuring and the open offer, to holders of the new loan notes. It will also issue a further 5% stake to the providers of its bridge securities loan facility to repay some of its debt.
It will then enter into an amended term facility with the provider of its loan facility, Ebok, extending the company's existing USD300 million loan facility until June 2019. It will also extend a further USD50 million repayment until June 2019.
On Wednesday, the company said it will engage further with the Ad Hoc Committee of bondholders regarding its request for an additional USD30 million in net cash proceeds borrowed under the bridge securities facility, and with other stakeholders, as appropriate, to discuss the potential implications on the proposed restructuring, including its timeline.
Bridge securities is a loan facility provided by the Ad Hoc committee of bondholders. Afren is currently seeking to increase the amount borrowed under the facility by USD30 million for additional working capital, which it will repay from proceeds from the new senior notes to be issued under the restructuring proposals.
Shareholders will vote on the proposed restructuring of the company later this month on July 24, if the timeline is not affected by the current business review.
Overall, the restructuring of the company's significant debt will result in existing shareholders facing substantial dilution to between 8.5% to 15% of the issued share capital of Afren.
Afren has urged shareholders to vote in favour of the restructuring, claiming there would be no value for shareholders if they reject the proposals.
The recommended restructuring, combined with the open offer, is the only viable opportunity for our shareholders to realise any value from their investment in the company. I urge all Afren shareholders to recognise this fact and vote to retain their active interest in the company by voting in favour of the proposed debt restructuring and refinancing," said Chief Executive Alan Linn in June.
By Joshua Warner; [email protected]; @JoshAlliance
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