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Oilexco North Sea (ONS) has liabilities of about £1.1billion, a joint administrator for the crashed oil company said yesterday.
Roy Bailey, of professional services firm Ernst and Young, was giving an update on the proposed sale of ONS – to Premier Oil – during a creditors’ meeting in Aberdeen.
Mr Bailey said the administration team had negotiated the best possible price for the business in the prevailing economic climate.
About 40 people were at Menzies Dyce Aberdeen Airport Hotel to hear him spell out the likely prospects for creditors following the proposed sale of ONS to Premier in a deal worth about £380million.
Mr Bailey said an amount earmarked for unsecured creditors – individually owed sums up to £15million – would deliver dividend payouts to them of just under 3.5p for every pound owed.
Banks – owed more than £600million – should get back about two-thirds of their total lending, he said, adding that administrators had borrowed more than £100million to keep ONS operating following its collapse at the start of 2009.
ONS creditors yesterday approved a company voluntary arrangement (CVA), taking the sale to Premier closer to an expected completion by the end of next month.
The deal includes the transfer of all ONS assets and its 80-strong workforce – including employees working offshore and at offices in Aberdeen and Norwich – to Premier.
Shareholders of Premier will gather for an extraordinary meeting on Monday to vote on the acquisition plus a £171million rights issue.
The sale of ONS is also conditional on approval by Canadian parent Oilexco and a formal discharge of the administration.
Premier, which has a registered address in Edinburgh and head office in London, has a fall-back option if any of these conditions is not met.
It would then, with shareholder approval, acquire the ONS assets for around £282million.
Under these circumstances, unsecured creditors of ONS will get a much smaller fraction of what they are owed and the banks would see a return of just half of what they lent.
ONS would most likely then go into liquidation, said Mr Bailey, adding that the Canadian parent – was itself now “heavily insolvent” and involved in bankruptcy proceedings in Canada.
Calgary-based Oilexco, whose few remaining assets include a flat in London and a share in a private jet for chief executive Arthur Millholland, will get a nominal one US dollar from the sale of ONS.
There were nine bidders for the whole of ONS and a further four wanting to acquire some of its assets.
Six of the nine were chosen to go through to the final bidding round.
Mr Bailey said: “The bids we had ultimately reflected the value of ONS in the current market. Premier’s was the highest.”
Speaking after the meeting, Mr Bailey added: “This initial approval of the CVA is a great result.
“Once this transaction is completed it will protect the jobs of the employees, maintain exploration and development in the North Sea and enable a greater recovery for ONS creditors than would otherwise be expected.”
ONS activities are focused on the outer Moray Firth and central Graben areas of the central North Sea.
Oilexco put it into administration after bankers refused to give more financial support to the business.
Premier, which has production interests in the UK, Indonesia, Pakistan and Mauritania, and exploration and appraisal operations in the UK, Africa and south and south-east Asia, says the ONS acquisition will give it “critical mass” in the North Sea.