On 3rd February, Premier Oil announced that it had agreed with key members of the “Private Lending” group on the refinancing terms. The terms include:
- Retaining the existing USD3.9 billion facilities with maturity extended to May 2021
- Covenants relaxed to 7.5x in 2017, 5x by end 2018 and returning to 3x by 2019
- Covenant net debt (including Letter-of-Credit) to be less than USD2.95 billion by end 2018
This terms will now be circulated to credit committees for approval, including RCF, term loan, Schuldschein and private placement noteholders), with lock-up agreements expected by the end of the month. The amended terms will also be presented to the public bondholders, with negotiations with convertible bondholders also close to a conclusion.
As a way to reduce increased interest payments under the new terms, Premier Oil will issue equity warrants for up to 90 million new shares (15% of issued shares) at 42.75p/share. This could be worth around USD50 million, although there is an option for lenders to take up synthetic warrants as a deferred fee of comparable value, reducing warrants issued.