(Alliance News) - Nostrum Oil & Gas PLC said Thursday it has secured an agreement with an ad hoc noteholder group with the aim of reducing its indebtedness and lowering the group's costs.
Shares in the exploration and production company, which operates in the Caspian Basin area in eastern Europe, closed 14% higher in London on Thursday at 6.43 pence each - but have lost 30% in 2021.
The noteholder group holds 54% of principal amount of the 8.0% senior notes due 2022 and 55% of the aggregate principal amount of the 7.0% senior notes due 2025.
As part of note restructuring, Nostrum will partially reinstate the group by issuing new senior secured notes in a principal amount of USD250.0 million; and senior unsecured notes in a principal amount of USD300.0 million, both maturing June 30, 2026.
It will then convert the remainder of the existing notes into equity.
"It is currently anticipated that the holders of the existing notes will own: 88.9% of the share capital of the company on closing of the restructuring; and warrants to subscribe for additional shares of the company such that the shares held by the holders of the existing notes would increase from 88.9% to 90% on exercise of all of the warrants," Nostrum explained.
The company will hold a general meeting to push through the restructuring, but has stressed it will go ahead with the plans even if shareholders - who will end up holding 11.1% of the issued share capital of the company immediately following the restructuring - vote against the move.
If it is a 'no' from shareholders, Nostrum said the deal is "likely to see a significantly worse outcome" than the one currently tabled.
Chief Executive Arfan Khan said: "We are delighted to announce an agreement between the group and the ad hoc noteholder group and ICU on the key terms of a sustainable restructuring of the notes. This agreement removes significant obstacles as we look to negotiate long term contracts to fill the spare capacity in our world class processing facilities and so secure the group's medium- and long-term future."
Nostrum hopes to complete the restructuring in the first half of 2022 and noted subsidiaries of ICU Holdings Ltd, the company's largest shareholder, has entered into a lock-up agreement in its capacity as a shareholder and holder of the notes.
"We would like to thank the ad hoc noteholder group and ICU for their ongoing support and commitment to the group demonstrated by this agreement," Khan added.
"We will continue to work constructively with our financial stakeholders to convert the agreement into long form documents and to take the further steps required to thus fully implement the restructuring."
By Paul McGowan; paulmcgowan@alliancenews.com
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Nostrum Oil&gas (NOG)