Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Premier Oil boss Tony Durrant had received some bad news. After two-and-a-half years battling to get the company’s finances back in order, a sense of foreboding returned to its Belgravia headquarters,Alp Ercil, the founder of Asia Research and Capital Management, had just explained why he would not support a deal Durrant believed was the key finally sorting out Premier Oil’s debts. The former Lehman Brothers banker wanted to pay BP more than $600m (£460m) on a collection of North Sea oilfields. Ercil’s $4bn Hong Kong-based hedge fund, a major lender to Premier Oil, didn’t like the idea. It came as a hammer blow.Yet at the time Durrant had little sense of the scale and complexity of his opponent’s moves against him. Within weeks, ARCM had disclosed the biggest-ever bet against a British listed company. Premier Oil, it emerged, was the target of a very big short.The seeds of the company’s predicament were sown almost three years ago. Hauling Premier Oil away from the precipice, Durrant struck a deal with banks, hedge funds and insurance firms owed almost $3bn.“We can get on with the business of running the company,” he said at the time, as creditors gave Premier Oil until 2021 to repay their loans.The problem, insiders point out, was that every part of “doing business” required approval from lenders. Premier Oil had signed up a so-called “override agreement” to get the rescue over the line. If Premier’s strategy was too risky, creditors could just say no.Despite this, Durrant made significant headway in the months and years that followed. Paying down hundreds of millions in debt, the company’s shares made modest gains. Its corporate bonds, which had been trading at heavily distressed prices, regained almost all of their lost ground.Durrant’s North Sea bid, which came months after a failed attempt to snaffle other unwanted claims in the region owned by Chevron, was pitched to lenders on Oct 25 last year. At first glance, BP’s oilfields were a compelling opportunity, sources say. Aside from throwing off plenty of cash, profits would be effectively tax-free, on account of $4bn of tax losses Premier had built up over the years.“The presentation looked fantastic,” was the initial reaction of one creditor.ARCM agreed, insiders say. And in the days that followed the hedge fund led a campaign to convince its fellow creditors to lend their support. Such was its enthusiasm, it wanted to inject up to a further $150m in a share placing to fuel the strategy.Within a week, however, the enthusiasm turned into disapproval. Having sifted through the finer details of the acquisition, the numbers didn’t stack up, ARCM and its advisers concluded.“Everything we thought about the transaction had changed,” says one ARCM insider.The hedge fund has since spelt out its concerns as part of a campaign against Premier Oil. It is demanding answers from Durrant – not least on what ARCM considers overly bulli
Interesting article. And you've got to love how the writer refers to ARCM as a "vulture fund".
Good to see a 4.3 million draw this week. https://www.tradingfloor.com/calendar/us-api-weekly-statistical-bulletin
You can find info here on current short positions (but only positions for companies which actually know that they are meant to declare this, I should add!!) http://www.shortics.com/premier%20oil%20plc
This time it worked... that is very odd??
OK, trying this again to see if it posts this time without being removed...
https://simplywall.st/stocks/gb/energy/lse-pmo/premier-oil-shares/news/is-there-more-to-premier-oil-plc-lonpmo-than-its-10-0-returns-on-capital/
Andy, if I post the proper link it gets removed by the board auto-censors. Just google - simply wall street premier oil 10% - and you should see the article there. Hope that helps.
Premier apparently did take on ARCM in court yesterday. An article from Reuters confirms ARCM were represented at the court hearing. Also, good to know that Premier has its confirmation in writing from creditors totalling 75% of the debt. Less chance of any backing out if its down on paper. I have to agree with posters below, Tony D. has did a sterling job.
From the Reuters article:
An ARCM request for an adjournment of the creditor vote was not successful on Thursday. ARCM had no immediate comment. A spokesman [for Premier] added that Premier had the creditors’ promise of support in writing.
Indeed we do. I won't lose any sleep over the pickle ARCM have got themselves into! My field is data protection and information law, not company law so I do have a legal background. I also work in Scotland so operate under the Scottish system. But specialists in company law would have a far better in-depth knowledge of these proceedings and what to expect than I have. Nice board. It's good to be able discuss things of interest with such a rational bunch of fellow shareholders.
No Grippa. The court process for PMO's scheme of arrangement request is only beginning today in court (according to Bloomberg). It will probably take some time for the full process to play out and for a decision to be reached. The other article I posted from Pinset Mason (just to illustrate how the process works) concerned a different case. In that case the judge found that even though the majority of creditors agreed to the scheme of arrangement, it could not go through because it was unfair to the minority of creditors who opposed it. But common sense prevailed and that crazy conclusion was overturned at the Court of Appeal.
They would have to go anyway.
Before I have to go and do some real work, here is an example of how the Scottish Scheme of Arrangement proceedings can play out. Pleased to see that Court of Session finding was overturned on Appeal.
h t t p s : / / w w w .pinsentmasons.com/out-law/guides/scottish-lion
Just noticed that the link to this article has been removed. You can find it at h t t p s : / / w w w . bloomberg.com/news/articles/2020-01-14/premier-oil-faces-legal-fight-with-top-lender-over-debt-plan
That occurred to me too. I am thinking that it may be the case that they already have the numbers required? I can't see them going through the court process if they didn't, because without the required numbers their petition would surely be null and void?
It appears PMO's court case begins tomorrow. Let's hope ARCM get slaughtered. Also interesting ()but not surprising) to see the response from the FCA to Bloomberg's probing of ARCM's failure to notify of their short position. The words "chocolate teapot" spring to mind.
hxxps://www.bloomberg.com/news/articles/2020-01-14/premier-oil-faces-legal-fight-with-top-lender-over-debt-plan
January 14, 2020, 4:15 PM GMT
Premier Oil Plc faces a courtroom showdown with its biggest creditor on Wednesday, a Hong Kong hedge fund that wants to block its plans to extend debt and buy new gas fields.The oil exploration firm will start a legal process in Edinburgh to extend debt maturities to November 2023 and expand in the North Sea, the court confirmed on Tuesday. The company will need permission from court and approval from 75% of creditors to make the deal binding for all lenders. ARCM said at the time it “will vigorously contest any attempt to implement such proposal via a scheme of arrangement” in Scotland, where the company has its registered office.Officials at Premier Oil declined to comment on the court process. A spokeswoman for ARCM declined to add further comment on Tuesday to its earlier statements.Emma Kane, a representative for a group of lenders that supports Premier Oil’s plans said that “the reaction from stakeholders across debt and equity has overwhelmingly endorsed the company’s plan.”“The sole voice of opposition is from ARCM - a hedge fund with the largest short position in Europe, one that they failed to make appropriate disclosures on until very recently,” Kane said.“As the regulatory authority responsible for monitoring short selling notifications we are aware of the matter and in line with policy, we do not comment on operational matters,” a spokeswoman for the FCA wrote in an email responding to Bloomberg’s questions over ARCM short position.
Still holding 47K shares (£54,000) here. Limit order set at £1.50.