* Merger will create biggest UK N. Sea oil, gas producer
* Premier had $1.9 bln in net debt
* Reverse takeover would retain Premier's London listing
* Premier shareholders expected to own under 6% of new group
(Adds detail, background)
Oct 6 (Reuters) - Premier Oil and private equity
backed Chrysaor will merge in a reverse takeover which will see
Premier's creditors being paid $1.23 billion in cash and its
shareholders with an expected 5.45% of the combined group, the
firms said on Tuesday.
The deal will fold one of the world's oldest independent
producers into a private equity backed group as the sector faces
declines in both demand and market appetite for oil stocks.
Chrysaor's largest shareholder, Harbour Energy, is expected
to own just over 39% of the merged company, which will stay
listed on the London Stock Exchange, although the deal still
needs approval by regulators and Premier's creditors and
shareholders.
Premier, which traces its history back to the 1930s,
underwent debt restructuring in 2017 after the last oil price
collapse. It currently has net debt of $1.9 billion and a market
capitalisation of $182 million.
"The (Premier) Board intends to recommend unanimously this
transaction to shareholders as being in the best interests of
shareholders and the company," said Roy Franklin, chairman of
Premier.
Chrysaor, backed by private equity firms Harbour and EIG,
has become a major North Sea producer by buying up British
fields from Royal Dutch Shell and ConocoPhillips
, spending about $5.7 billion since 2017.
It produces around 200,000 barrels of oil equivalent per day
(boe/d), and combined with Premier's output of around 70,000
boe/d would become be the biggest oil and gas producer in the
British North Sea, topping BP.
Premier also brings a 25% stake in Mexico's Zama shallow
water offshore project.
The new firm will also be able to use tax allowances from
past losses Premier has accrued.
It will be run by Linda Cook, currently CEO of Harbour,
while current Chrysaor chief Phil Kirk will be president and
chief of its European business.
Tuesday's announcement made no mention of a future role for
Premier CEO Tony Durrant.
(Reporting by Shadia Nasralla and Yadarisa Shabong in
Bengaluru; Editing by Krishna Chandra Eluri)
