LONDON (Alliance News) - Afren PLC Friday launched its proposals to restructure the company's debt, including an open offer and the recovery of USD148 million by restructuring its outstanding loan notes, urging shareholders to vote in favour to get through a "difficult period".
"Afren shareholders have been through an incredibly difficult period in the life of the business, and the next steps, whilst complex, are essential if we want to successfully emerge from this period on a value growth trajectory. I am clear that the only viable course of action for the business is to progress through the proposed refinancing process," said Afren Chairman Egbert Imomoh.
The proposed restructuring comprises of implementing a scheme of arrangement for its existing loan notes, which will include issuing USD369 million of new high yield notes due in 2017 to refinance and repay existing securities, providing USD148 million in proceeds.
Afren would also convert USD234 million of existing loan notes, made up of 25% loan notes due in 2016, 2019 and 2020 into new shares in the company, which would represent 80% of the existing share capital of Afren.
The remainder of the existing notes will be cancelled and reissued in equal amounts of USD350 million each, due December 2019 and December 2020 respectively, both with an annual interest rate of 9.1%.
Afren also wants to issue new shares, equal to 50% of the share capital following the restructuring of the loan notes, to the holders of those loan notes. That comprises of issuing GBP49.2 million worth of new shares through an open offer at 1.0 pence per share. That represents a 46.5% discount to the closing price on Thursday.
The company would also issue additional shares, equal to 10% of the issued share capital after the loan note restructuring and the open offer, to holders of the new loan notes. It will also issue a further 5% stake to Bridge Securities to repay some of its debt.
It will then enter into an amended term facility with the provider of its loan facility, Ebok, extending the company's existing USD300 million loan facility until June 2019. It will also extend a further USD50 million repayment until June 2019.
"The recommended restructuring, combined with the open offer, is the only viable opportunity for our shareholders to realise any value from their investment in the company. I urge all Afren shareholders to recognise this fact and vote to retain their active interest in the company by voting in favour of the proposed debt restructuring and refinancing," said Chief Executive Alan Linn.
Afren shares closed down 12.3% to 1.64 pence per share Friday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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