Afren confirms restructuring talks, SEPLAT pitches below recent share price; PwC to advise lenders
Afren plc ("Afren" or the "Company") notes the recent press speculation regarding a possible financial restructuring. The Company confirms it has been reviewing with its advisors its capital structure, liquidity and funding requirements. As part of that process the Company is in discussions with its lenders regarding amendments to its existing facilities, in addition to seeking a deferral of a USD 50m amortisation payment due at the end of January 2015. Given the rapid decline in the oil price the Company is also reviewing its cost base and capital expenditure plans for 2015.
Afren continues to be in discussions with SEPLAT Petroleum Development Company plc ("Seplat") regarding a possible combination with Afren.
There can be no certainty that an offer will be made or as to the terms of any offer.
Afren notes that in accordance with Rule 2.6(a) of the Code, by no later than 5.00 p.m. on 30 January 2015, Seplat must either announce a firm intention to make an offer for Afren under Rule 2.7 of the Code or announce that it does not intend to make an offer for Afren, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline can be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.
Sky News reported that PricewaterhouseCoopers is believed to have been engaged to advise Afren’s lenders on a potential restructuring of the business.
Restructuring advisers from Morgan Stanley are believed to be working on options for Afren in the event that SEPLAT’s potential offer collapses, the Sky report said. It noted that Morgan Stanley is already Afren’s broker and advising on the takeover talks. Sources cited in the piece said a Morgan Stanley team is also looking at options for restructuring, amid expectations among City observers that Afren may breach its debt covenants.
SEPLAT is rumoured to have approached Afren with an offer pitched below the UK-listed oil and gas group’s recent share price high, the Financial TImes reported. The market report said the rumour was circulating around City dealers yesterday, 20 January.
African explorer T5 Oil & Gas yesterday announced it has no plans to make an offer for Afren, following reports the start-up company was considering a reverse takeover, the FT report noted.