TIDMAFR
RNS Number : 9210L
Afren PLC
30 April 2015
THIS ANNOUNCEMENT IS NOT FOR RELEASE, DISTRIBUTION OR
PUBLICATION IN WHOLE OR IN PART IN OR INTO THE UNITED STATES,
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JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS
ANNOUNCEMENT.
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND
INVESTORS MUST ONLY SUBSCRIBE FOR OR PURCHASE ANY SECURITIES
REFERRED TO IN THIS ANNOUNCEMENT ON THE BASIS OF THE INFORMATION
CONTAINED IN A PROSPECTUS AND NOT IN RELIANCE ON ANY INFORMATION IN
THIS ANNOUNCEMENT.
Completion of interim funding, appointment of new CEO and update
on reserves
London, 30 April 2015
Afren plc ("Afren", the "Company" or the "Group"), (LSE: AFR)
announces that, further to its announcements of 13 March and 1
April 2015, it has successfully completed key steps in its
recapitalisation plan to address its funding requirements and
operational repositioning which will allow it to succeed in the
current oil price environment:
-- US$255 million of net total funding to be provided by
bondholders as part of the recapitalisation, with the ability to
increase such net funding to US$305 million
-- Arrangements for the provision of US$200 million in net
interim funding provided by bondholders have been completed, the
remaining committed US$55 million will be provided at closing which
is expected to be in July 2015
-- Alan Linn has been appointed as Afren's new CEO bringing to
'New Afren' 35 years' of industry experience and a successful track
record implementing strategic change within established
businesses
-- The recapitalisation and investment demonstrates the ongoing
commitment to invest in Nigeria
These steps set 'New Afren' on a decisive path to address the
operational and governance issues it has faced and ensure it can
successfully reposition itself focused on its core Nigerian
producing assets.
Commenting today, Alan Linn, new CEO of Afren plc, said:
"I am looking forward to working with the Afren team and its
partners to deliver a lean and effective business with an oil
production and development focus. The strong support shown by key
stakeholders ensures we can now progress a number of important
development projects in Nigeria which will contribute early
production and revenue to the business and support our aim to be
profitable in a lower oil environment.
There is a lot to do. However, the core assets and the quality
of people and partners I've met give me the confidence to say that
Afren has an attractive future and I am pleased to have the
opportunity to contribute to this future success."
Commenting today, Egbert Imomoh, Chairman of Afren plc,
said:
"I am very happy we have reached agreement on our
recapitalisation which will allow us to create a 'New Afren'.
I am also delighted to welcome Alan Linn as CEO to drive the
future redevelopment of Afren. He comes with deep industry
experience and a strong track record of success. We are fortunate
to have attracted such an outstanding CEO to lead the 'New Afren'.
I would like to thank Toby Hayward for stepping into the role of
Interim CEO at a very difficult time in the Company's history."
Completion of Interim Funding
Afren is pleased to announce that it has satisfied the
conditions precedent to the funding agreement with certain holders
of its 2016 Notes, 2019 Notes and 2020 Notes (the "Participating
Noteholders") for the provision of US$200 million in net interim
funding (the "Interim Funding"). The Interim Funding is being
provided in the form of super senior private placement notes
("PPNs") which have been issued to the Participating Noteholders on
the terms disclosed in the announcement of 13 March 2015. These
funds will be used to funding our core Nigerian producing assets,
as well as paying existing creditors built up during the Group's
liquidity squeeze.
Appointment of new CEO
The Board is delighted to confirm the appointment of Alan Linn
as the new Chief Executive Officer and executive director of Afren
with immediate effect.
Alan has 35 years of international experience in the oil and gas
industry developing and restructuring businesses in challenging and
diverse environments. He has been successful in implementing
strategic change within established businesses and has over 12
years' experience working with executive teams and boards in
companies listed in the UK and Australia. He has a strong track
record of delivering sound commercial and operational results
within both large and small oil and gas companies.
Following Alan Linn's appointment as CEO, Toby Hayward will be
stepping down as interim CEO with immediate effect and will
continue as an independent non-executive director of the Company.
In addition, the Board will be further strengthened with the
appointment of new directors to broaden its expertise in due course
and an executive search firm is being retained to assist with this
process.
Update on Reserves
The Company announces an update on its reserves as at 31
December 2014 as audited by NSAI. A summary of such 2P reserves is
set out below.
Proved and Probable Oil and Gas reserves statement by asset
as at 31 December 2014
Working Interest basis before royalties
Aje (OML
Okoro Ebok Okwok 113) OML26
Oil (mmbbl) Oil (mmbbl) Oil (mmbbl) Oil (mmbbl) Oil (mmbbl)
At 31 December
2013 27.7 58.0 26.4 - 60.0
Revisions of
previous estimates (2.5) (0.7) 3.5 - (3.6)
Discoveries
and extensions - - - 4.4 -
Production (3.0) (8.2) - - (0.5)
At 31 December
2014 22.2 49.1 29.9 4.4 55.9
===================== ============ ============ ============ ============ ============
Next steps for the Recapitalisation
Afren is now proceeding to implement the next steps for the
completion of its previously announced financial and capital
restructuring. The Company has entered into a conditional
subscription agreement with the Participating Noteholders in
respect of the issue of US$274 million in principal amount of high
yield notes (the "New Senior Notes") which will be used to
refinance the PPNs and provide an additional US$55 million in net
cash proceeds to the Group. In accordance with the provisions of
the subscription agreement, the Company is seeking additional
commitments from other holders of the 2016 Notes, 2019 Notes and
2020 Notes (the "Existing Noteholders") to subscribe for additional
New Senior Notes so as to increase the principal amount of the New
Senior Notes to up to US$325 million in order to be able to receive
up to US$305 million in net cash proceeds as originally
proposed.
In conjunction with such agreement, the lenders under the
Group's existing US$300 million Ebok credit facility have agreed to
the deferral of the US$50 million amortisation payments due on 31
January 2015 and 30 April 2015 until the completion of the
implementation of the Recapitalisation (at which point it is
expected that the amortisation payments will be further deferred
until after the repayment of the New Senior Notes).
It is anticipated that the Recapitalisation will now be
completed by the end of July 2015. The implementation of the
Recapitalisation is subject to entry into and completion of further
documentation and formal approval by the Participating Noteholders
and each of the lenders under the Group's US$300 million secured
facility in respect of Ebok. Shareholders will also be asked to
approve the issue of new shares in connection with the
Recapitalisation; if shareholders do not approve the relevant
resolution at the general meeting to be convened in due course, the
Recapitalisation will still proceed, but on amended terms as
outlined in the announcement of 13 March 2015.
Further details regarding the Recapitalisation will be announced
in due course.
For further information contact:
Afren plc Tel: +44 20 7864 3700
Simon Hawkins, Group Head of Investor Relations
Bell Pottinger (public relations adviser to Afren plc) Tel: +44
20 7772 2500
Gavin Davis
Henry Lerwill
APPENDIX
Interim Funding
Afren is pleased to announce that it has satisfied the
conditions precedent to the funding agreement with noteholders
representing approximately 50% of the outstanding principal amount
due under its 2016 Notes, 2019 Notes and 2020 Notes (the "Ad Hoc
Committee") for the provision of US$200 million in net interim
funding (the "Interim Funding"). The Interim Funding is being
provided in the form of super senior private placement notes
("PPNs") which have been pre-placed with the Participating
Noteholders who comprise some of the members of the Ad Hoc
Committee.
Pursuant to a note purchase agreement dated 30 April 2015
between the Company and the Participating Noteholders, the Company
will issue US$211.6 million of PPNs with a maturity date of 25
April 2016 bearing interest of 15% per annum (payable in kind). It
is expected that the PPNs will be repaid out of the proceeds of new
high yield notes and the issue of new ordinary shares in the
capital of the Company to be issued in connection with the
Recapitalisation (as defined below).
The Participating Noteholders may in their discretion, if
requested by the Company, increase the size of the issue of the
PPNs to result in up to an additional US$50 million in net interim
funding.
Recapitalisation
Further to the announcement of 13 March 2015 (the "13 March
Announcement"), the Company is continuing to work with the Ad Hoc
Committee and the lenders (the "Ebok Lenders") under its existing
US$300 million Ebok credit facility (the "Ebok Facility") towards
the implementation of a financial and capital restructuring of the
Group (the "Recapitalisation"). The Interim Funding will provide
immediate liquidity to the Group and provide time to implement the
required steps towards the completion of the recapitalisation
transaction that has been agreed between the Ad Hoc Committee and
the Ebok Lenders.
In connection with the Recapitalisation, the Company has entered
into a conditional subscription agreement (the "Subscription
Agreement") with the Participating Noteholders in respect of the
issue of US$274 million high yield notes (the "New Senior Notes")
which will be used to refinance the PPNs and provide an additional
US$55 million in net cash proceeds to the Group.
In accordance with the provisions of the Subscription Agreement,
the Company is seeking additional commitments from other holders of
the 2016 Notes, 2019 Notes and 2020 Notes (the "Existing
Noteholders") to subscribe for additional New Senior Notes so as to
increase the principal amount of the New Senior Notes to US$325
million and thereby receive up to US$305 million of net cash
proceeds.
As a result of the changes in the principal amount of New Senior
Notes which has been committed by the Participating Noteholders and
to reflect the fact that the Recapitalisation is now anticipated to
complete by the end of July 2015 (as compared to the end of June
2015), the following amendments are being made to the key terms of
the Recapitalisation set out in the 13 March Announcement:
-- The amount of principal and accrued but unpaid interest due
on the 2016 Notes, 2019 Notes and 2020 Notes (the "Existing Notes")
to be repaid is expected to be approximately US$934 million (as
compared to US$920 million), which will be repayable as
follows:
o 25% of such outstanding amount (approximately US$233 million)
will be converted into ordinary shares of the Company (still
representing 80% of the increased share capital of the Company
immediately following such conversion (the "Debt for Equity
Swap").
o The remaining Existing Notes (approximately US$700 million)
will be reinstated into two equal tranches of approximately US$350
million with a maturity of December 2019 and December 2020,
respectively (with the other terms of such notes unchanged).
-- To the extent the aggregate amount of New Senior Notes
subscribed is less than US$320 million, the amount of new ordinary
shares to be issued to subscribers of the New Senior Notes will be
reduced pro rata from the previously announced 50% of the total
issued share capital of the Company following the Debt for Equity
Swap.
o For example, if the size of the New Senior Notes issue remains
at US$274 million, the subscribers for such notes will receive new
ordinary shares representing approximately 42.8% of the total
issued share capital of the Company following the Debt for Equity
Swap.
-- If the New Senior Notes are not issued by 22 July 2015, the
number of new ordinary shares to be issued to subscribers for the
New Senior Notes will increase by 0.1205% per day until the date of
issue of the New Senior Notes (reflecting the per diem funding
commitment risk for the Participating Noteholders).
o For example, if the New Senior Notes are issued on 27 July
2015 (a delay of 5 days), the total size of the New Senior Notes
Share Issue will increase by 0.6025% of the total issued share
capital of the Company following the Debt for Equity Swap.
-- The amortisation profile under the Ebok Facility (as defined
in the 13 March Announcement) will be amended as follows:
o No amortisation payments will be made until the earlier of 30
September 2018 and the New Senior Notes being repaid.
o The fixed quarterly amortisation payments will be increased to
US$15.6 million rising to US$27.2 million.
-- The lender under the US$50 million secured facility in
respect of Okwok/OML 113 has agreed to extend the term of such
facility until June 2018, with US$20 million of amortisation
payments due by March 2016 and the balance being amortised through
equal quarterly payments until June 2018. The interest rate under
this facility will remain at 9.5% per annum, but the lender will
receive a fee equal to 1.5% of the facility, payable in kind at the
maturity of the facility.
-- If the Recapitalisation is not approved by shareholders at
the general meeting of the Company to be convened in due course,
the terms of the New Senior Notes will be revised as follows (as
compared to the terms set out in the 13 March Announcement):
o The Existing Notes will be amended and reinstated into US$350
million notes due 2019, US$350 million notes due 2020 and US$233
million notes due 2021.
o The principal amount of the New Senior Notes issued to the
Existing Noteholders who subscribe for such notes will be increased
to US$302 million (assuming only US$274 million of New Senior Notes
are subscribed).
o The interest payable on the New Senior PIK Notes (as defined
in the 13 March Announcement) will be reduced from 2.7% to 2.5% per
annum and the interest payable on the New Junior PIK Notes (as
defined in the 13 March Announcement) will be increased from 26.8%
to 26.9% per annum.
Accordingly, following completion of the Recapitalisation and
assuming that the proposed open offer of new shares to shareholders
(the "Open Offer") is subscribed in full by existing shareholders
only, existing shareholders will hold up to approximately 14% of
the fully diluted share capital of the Company (assuming the Open
Offer is made at a 40% discount to the theoretical ex-rights price
of the ordinary shares).
It is anticipated that the Recapitalisation will now be
completed by the end of July 2015. The implementation of the
Recapitalisation is subject to entry into and completion of further
documentation and formal approval by the Participating Noteholders
and each of the Ebok Lenders.
Appointment of new CEO - further information
Prior to joining Afren, Alan was chief executive officer and
executive director at ROC Oil, based in Australia and Malaysia from
2008 to date. Alan has held senior roles in operational, commercial
and general management previously with African Arabian Petroleum,
Tullow Oil, Cairn Energy, LASMO/ENI and ExxonMobil. He has direct
experience of successfully managing complex partner and government
relationships as well as leading operational and EHS excellence
from boardroom to drill bit.
Alan has a BSc in Chemical Engineering from Strathclyde
University in Glasgow and a Fellow of the Institute of Chemical
Engineers.
The Company confirms that there are no further disclosures
required in respect of LR 9.6.13.
Update on reserves
The Company announces an update on its reserves as at 31
December 2014 as audited by NSAI. A summary of such 2P reserves is
set out below.
Proved and Probable Oil and Gas reserves statement by asset
as at 31 December 2014
Working Interest basis before royalties
Aje (OML
Okoro Ebok Okwok 113) OML26
Oil (mmbbl) Oil (mmbbl) Oil (mmbbl) Oil (mmbbl) Oil (mmbbl)
At 31 December
2013 27.7 58.0 26.4 - 60.0
Revisions of
previous estimates (2.5) (0.7) 3.5 - (3.6)
Discoveries
and extensions - - - 4.4 -
Production (3.0) (8.2) - - (0.5)
At 31 December
2014 22.2 49.1 29.9 4.4 55.9
===================== ============ ============ ============ ============ ============
As previously announced in January 2015, the Company received an
update on its reserves at Barda Rash (prepared by RPS Energy) which
resulted in the elimination of the gross 2P reserves of 190 mmbbls
at Barda Rash. Accordingly, the total 2P reserves for the Group
(showing the change from 31 December 2013) by country is as
follows:
Proved and Probable Oil and Gas reserves statement by country as
at 31 December 2014
Kurdistan Region
Nigeria of Iraq Total Group
Oil Oil Oil
(mmbbl) Gas(bcf) mmboe (mmbbl) Gas(bcf) mmboe (mmbbl) Gas(bcf) mmboe
At 31 December
2013 172.1 - 172.1 113.9 - 113.9 286.0 - 286.0
Revisions
of previous
estimates (3.4) - (3.4) (113.8) - (113.8) (117.2) - (117.2)
Discoveries
and extensions 4.4 - 4.4 - - - 4.4 - 4.4
Production (11.7) - (11.7) (0.1) - (0.1) (11.8) - (11.8)
At 31 December
2014 161.5 - 161.5 0.0 - 0.0 161.5 - 161.5
================= ========= ========= ======= ========= ========= ======== ========= ========= ========
In connection with the provision of the Interim Funding and the
Recapitalisation, Ryder Scott Company L.P. ("Ryder Scott") was
mandated in February 2015, at the request of the Ad Hoc Committee,
to (i) review the results presented in "Estimates of Reserves and
Future Revenue to the Afren plc Interest in Certain Oil and Gas
Properties Located in Okoro, Ebok and Okwok Fields Offshore Nigeria
as of December 31, 2013" published by NSAI (the "2013 Report") and
commissioned by the Company and (ii) perform a cursory review of
the 2013 Report, work process, data, and analysis for the specified
properties and then provide the Ad Hoc Committee with an initial
appraisal report opining on the work performed by NSAI.
Based on its review, Ryder Scott concluded that NSAI's methods
and procedures are performed within generally accepted geological
and engineering practices. NSAI followed standard practices and
their approach was deemed appropriate given the timing of the
review (year-end 2013). Ryder Scott highlighted that there were
certain modifications and alternative methods which could
potentially improve the NSAI analysis to provide a more integrated
and robust evaluation of the reserves and economic analyses,
however, without a more detailed analysis, they could not comment
on the overall quantitative effect that those changes would have on
the reserves reported by NSAI as of 31 December 2013. Given their
review was on the historical 2013 Report, Ryder Scott noted that
the Ad Hoc Committee should consider the new 2014 NSAI report and
any updates to the Group's reserves referred to therein.
A copy of NSAI's report entitled "Estimates of Reserves and
Future Revenue to the Afren plc Interest in Certain Oil and Gas
Properties Located in Okoro, Ebok and Okwok Fields Offshore Nigeria
as of December 31, 2014" is available on the Company's website
www.afren.com.
FHN
The Company has reached agreement with Earl-Act Global
Investments Limited ("EAG") and CSL Trustees Limited ("CSL") to
acquire the 22% of shares in First Hydrocarbon Nigeria Company
Limited ("FHN") that the Company does not currently own. Afren has
amended the terms of the put/call option with EAG announced on 5
July 2013 in respect of 18,299,993 shares in FHN to be acquired at
US$3.32 per share and has also agreed to purchase the 13,780,008
FHN shares owned by CSL at US$2.80 per share. In each case such
shares will now be acquired and the purchase price will be payable
in equal quarterly instalments from 30 June 2017 to 30 September
2019 (together with annual interest of LIBOR + 6.5% payable in cash
and 2.5% payable in kind payable in respect of the purchase
price).
The Company has also successfully re-scheduled the payment terms
in respect of 11,322,111 shares in FHN acquired from Capital
Alliance Energy Nigeria Limited (as previously announced on 5 July
2013) such that the outstanding purchase price of US$22.3 million
will now be payable in instalments between July and December 2015
(rather than in full in July 2015).
Notes
This announcement is for information purposes only and does not
constitute an invitation or offer to buy, sell, issue, underwrite,
acquire or subscribe for, or the solicitation of an offer to buy,
sell, issue, acquire or subscribe for any securities, nor shall
there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful. Any failure to
comply with these restrictions may constitute a violation of the
securities laws of such jurisdictions.
In particular, this announcement does not constitute or form
part of any offer to buy, sell, issue, acquire or subscribe for, or
the solicitation of an offer to buy, sell, issue, acquire, or
subscribe for, any securities in Australia, Canada, Japan, the
Republic of South Africa or any other jurisdiction into which such
offer or solicitation would be unlawful. No public offering of the
securities referred to herein is being made in the United Kingdom,
Australia, Canada, Japan, the Republic of South Africa or any other
jurisdiction.
This announcement is not an offer of securities for sale in the
United States. The securities referred to above have not been, and
will not be, registered under the United States Securities Act of
1933, as amended (the "US Securities Act"), and may not be offered
or sold in the United States absent registration or an exemption
from registration as provided in the US Securities Act and the
rules and regulations thereunder. There has not been and will not
be a public offer of the securities in the United States.
The distribution of this announcement in certain jurisdictions
may be restricted by law. No action has been taken that would
permit an offering of any securities or possession or distribution
of this announcement or any other offering or publicity material
relating to such securities in any jurisdiction where action for
that purpose is required. Persons into whose possession this
announcement comes are required to inform themselves about, and to
observe, such restrictions. Any failure to comply with these
restrictions may constitute a violation of the securities laws of
any such jurisdiction.
Disclaimer and cautionary note on forward looking statements and
notes on certain other matters
Certain statements in this announcement are not historical facts
and are or are deemed to be "forward-looking". The Company's
prospects, plans, financial position and business strategy, and
statements pertaining to the capital resources, future expenditure
for development projects and results of operations, may constitute
forward-looking statements. In addition, forward-looking statements
generally can be identified by the use of forward-looking
terminology including, but not limited to; "may", "expect",
"intend", "estimate", "anticipate", "plan", "foresee", "will",
"could", "may", "might", "believe" or "continue" or the negatives
of these terms or variations of them or similar terminology.
Although the Company believes that the expectations reflected in
these forward-looking statements are reasonable, it can give no
assurance that these expectations will prove to have been correct.
These forward-looking statements involve a number of risks,
uncertainties and other facts that may cause actual results to be
materially different from those expressed or implied in these
forward-looking statements because they relate to events and depend
on circumstances that may or may not occur in the future and may be
beyond Afren's ability to control or predict. Forward-looking
statements are not guarantees of future performances.
Factors, risks and uncertainties that could cause actual
outcomes and results to be materially different from those
projected include, but are not limited to, the following: risks
relating to changes in political, economic and social conditions in
the countries in which Afren operates; future prices and demand for
the Company's products; global oil production; trends in the oil
& gas industry and domestic and international oil & gas
market conditions; risks in oil & gas operations; future
expansion plans and capital expenditures; the Company's
relationship with, and conditions affecting, the Company's partners
and regulators; competition; weather conditions or catastrophic
damage; risks relating to law, regulations and taxation in the
countries in which Afren operates, including laws, regulations,
decrees and decisions governing the oil & gas industry, the
environment and currency and exchange controls and their official
interpretation by governmental and other regulatory bodies and by
the courts; and risks relating to global economic conditions and
the global economic environment. Additional risk factors are as
described in the Company's annual report.
Forward-looking statements are made only as of the date of this
announcement. The Company expressly disclaims any obligation or
undertaking to release, publicly or otherwise, any updates or
revisions to any forward-looking statement contained in this
announcement to reflect any change in its expectations or any
change in events, conditions, assumptions or circumstances on which
any such statement is based unless so required by applicable
law.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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