LONDON (Alliance News) - Afren PLC's funding problems deepened on Tuesday as the company said it is in talks with a committee of its bondholders and said that should its debt structure remain as it is, it will need equity funding beyond its current market capitalisation.
The FTSE 250-listed oil and gas explorer reiterated that is is in talks with the lenders of its USD300 million Ebok facility with a view to obtaining a deferral on the USD50 million amortisation payment due on January 31. In addition to that, the company is now considering whether to utilise a 30-day grace period under its 2016 bonds regarding USD15 million in interest due on February 1 as it completes the work on its capital structure review and seeks alternative funding arrangements.
Afren said it has been advised that an ad hoc committee comprising its largest bondholders has been created, and it has initiated talks with this committee over the immediate liquidity and funding needs of the company.
Afren said it has reviewed its business plan with a view to minimise its funding requirements given the collapse in the oil price in order to focus on its key assets in Nigeria. But assuming its current debt structure remains as it is, the company will require equity funding which is likely to be "significant" and which would be in excess of its current market capitalisation, which is currently at around GBP195.7 million.
The company said it would need new funds to meet interest and principal repayments, provide working capital and to cover a reduced capital expenditure programme. It is in talks with its current stakeholders and third party investors over recapitalising the business, it said
The board of Afren is implementing efficiency and cost-cutting measures in order to improve its liquidity position and said it has hired Alvarez & Marsal in the role of chief restructuring officer to advise on its options.
The group also briefly noted it remains in talks with SEPLAT Petroleum Development Co PLC regading a possible merger, but said there is no certainty an offer will be made, nor what the terms of an offer would be.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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Seplat Energy (SEPL)