Last checked at 
* Premier to buy BP assets, increase Tolmount stake
* Premier shares jump 18% on the news
* Premier to extend debt maturity to 2023
* Bondholder ARCM vows to fight Premier's plans
* Premier, Rockhopper find partner for Sea Lion project in
Navitas
(Adds details of rights issue, ARCM position, updates share
price)
By Shadia Nasralla
LONDON, Jan 7 (Reuters) - Premier Oil is set to buy
North Sea assets from BP and increase its stake in the
Tolmount gas project, funded by a $500 million rights issue, but
faces opposition from hedge fund ARCM, which vowed to fight the
plans.
Shares in UK-based Premier surged as much as 19% after it
said on Tuesday that it plans to buy stakes in the Andrew and
Shearwater oilfields from BP for $625 million and increase its
stake in the Tolmount project in a deal with South Korea's Dana
worth $191 million.
The acquisitions are the latest in a string of deals moving
North Sea assets from oil majors to smaller groups, and Premier
said the deals would generate more than $1 billion in free cash
flow by the end of 2023, boost its output to more than 100,000
boed and add 82 million barrels of reserves and resources to its
portfolio.
Its shares were up by around 17% at 118.5 pence by 1207 GMT,
after hitting 120.70, their highest in over a year.
The deals would be backdated to January 2019, shaving off
Premier's access to cash flow for the period until the deal
closes, but also depressing the actual price it expects to pay
to around $500 million.
The equity raise "has been fully underwritten on a standby
basis", existing cash and, if needed, a loan of $300 million,
Premier said.
The raise could also allow for new shareholders to buy into
Premier.
Premier had also announced an extension of its debt maturity
timeline by over two years to the end of November 2023. Premier,
which had a market capitalisation of around $1.1 billion before
the announcements, has a debt pile of around $2 billion.
Premier's shares gained 47% in 2019, boosted by Mexican oil
discoveries and the performance of its Catcher oilfield in the
North Sea.
Chief Executive Tony Durrant said that the response from
major shareholders for the plans announced on Tuesday was
"extremely positive".
Premier said it was confident it had enough support from 75%
of its creditors to get permission for the transactions at a
so-called Scheme of Arrangement Court meeting, for which no date
has been set yet.
But ARCM, which has had a growing short position in Premier
shares since 2017, reaching around 17% of the oil group's stock
- around four times higher than the average for London-listed
firms - rejected the plans.
ARCM, describing itself as Premier's largest creditor at 15%
of its debt instruments, said it would "take all steps" to
oppose the deals, objecting to Premier's focus on North Sea gas
assets, when Europe is importing more gas from Russia and the
United States, and warning of increasing decommissioning
liabilities for indebted Premier.
Premier said it expected to confirm details of the issue in
the first quarter.
In a string of announcements on Tuesday, Premier's partner
in the Sea Lion project off the Falklands Islands, Rockhopper
, said they had signed a preliminary deal for Navitas
Petroleum LP to buy a 30% stake.
The new partnership will reduce Premier's obligations to
build Sea Lion to around $285 million from $500 million, Durrant
said.
"Today's announcements have the potential to transform it
into one of the more investible names in the space," said BMO
analyst David Round.
"Not only will these deals add scale and growth, but
importantly Premier's deleveraging will accelerate towards much
more manageable levels."
(Reporting by Shadia Nasralla; Editing by Jason Neely/Louise
Heavens/Susan Fenton)
