LONDON (Alliance News) - Afren PLC Friday may have put the final nail in its own coffin after the board Friday said it has placed the company into administration following weeks of uncertainty since it cancelled a critical general meeting.
"The board has taken steps to put Afren Plc into administration and appoint Simon Appell, Daniel Imison and Catherine Williamson of AlixPartners as administrators," said Afren.
Earlier in July, the Nigerian oil producer said its shares had been suspended after a fall in production threatened its already controversial and much-debated restructuring plans, casting doubt on whether a general meeting, at which shareholders were due to vote on the company's proposed debt-for-equity swap with its bondholders, would go ahead at all.
That meeting was subsequently postponed "until further notice", causing a lot of uncertainty as to the future of the company.
On Friday, Afren said the expected "materially lower near-term production" from its assets has led to "a number of timing and pricing assumptions, as well as to some delays in project implementation during the period when initial funding was being finalised."
"Whilst the overall capacity of the assets to deliver field life production remains broadly unchanged, the near-term deferral of production revenues has undermined the immediate liquidity position of the business. The company has subsequently engaged in detailed discussions with all its stakeholders, including lending banks, bondholders and partners, to discuss the impact of the revised assumptions on Afren PLC's near-term cashflow, funding requirements and the resulting amendments in the terms of the restructuring which are required to deliver the revised business plan," it added.
The embattled company said it has exhausted all possible routes to save the company in a short space of time due to the company's dire liquidity issues, but said it failed to secure a revised refinancing and restructuring proposal that would result in Afren being able to pay its debts as they fall due.
"The appointment is made with the consent of the company's secured creditors and is seen by those secured creditors as an important step in preserving value in the company's subsidiaries. No other company in the Afren Group has appointed administrators today or taken any other step to commence insolvency proceedings. The group is in discussions with its partners and other key stakeholders with a view to continuing its operating businesses," said the company.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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