We'll see. My confidence in the company has been smashed with the last RNS, predominantly the statementy about the massive equity raise.
IMO however, if the BOD want to do it, or they let someone else do it doesn;t matter, but their issues aren't actually that tough. Others have had far far worse issues. The issues for Afren are totally around servicing of their debt. If they could renegotiate the Ebok debt facility and delay any repayment into 2016 which in order to do so it would likely increase the interest rate to around Libor plus 8-9% but can be done. The other thing they need to consider is the 2016 bond refinancing / debt repayment. I'm sure with an offer on that debt (which is trading at around a rate of 33) they could have this paid off at a discount to the coupon rate of $253m if they were to sell Barda Rash and divest half of their Ogo interest. This would delay all bond payments to 2019 or 2020 (no problem there) and defer any further principal payments on the Ebok facility into 2016.
I believe they are still making cash profits even at $45 but there major issue has been poor financial management around debt and interest repayments due ealry in 2015. They went gungho into Q4 on capex despite falling oil prices. Totally lost confidence in the CFO but doesn't mean that you lose all objectivity at looking at the company as a whole.
They just need to get the bondholders / debt providers to agree to these changes,
For that you just need to look at what they want. The bondholders want their investment and interest paid to them as contracted. The value of the bonds is now around 1/3rd of the original rate, and they will want Afren to survive as a healthy company is the best way for their investment to recover. A deferral of interest payments wouldn;t necessarily be a major issue. They could even through some options / warrants at faurly low prices in order for them to agree.
If they worked on this type of debt deal then it should release the pressure on their short term cashflow.
Whatever happens, IMO Darra Comyn should be toast.
Afren share price nightmare: Day of reckoning is here
by Jessica MorrisNEW 30 January 2015 12:00pm
Embattled oil producer Afren will today find out if it's been thrown a lifeline by rival company Seplat, a move that could provide one possible solution to the company's funding crisis.
Nigerian oil and gas explorer Seplat recently extended the deadline for its informal takeover offer - but at 5pm tonight its time will be up.
City analysts have voiced doubts the deal will come to fruition, saying there's "little likelihood of an offer on Friday". There's a better chance of "another extension, in light of the new situation, or no offer at all," broker Oriel said in a note.
Afren revealed it required a $200m (£133m) cash injection to avoid running out of funds on Tuesday, sending its shares down as much as 74 per cent.
The company is in talks to defer a $50m payment due at the end of next month, and considering whether to use a 30 day grace period for its $15m interest payment, due 1 February.
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