North Sea operator Premier Oil saw tens of millions pounds wiped off its market value yesterday amid speculation suggesting some of its lenders were baling out.
Premier has spent months trying to put together a refinancing that allows it to make inroads into a £2billion debt pile.
Yesterday, the company was forced to issue a statement reassuring the market after its share price slid more than 10%.
But the move failed to calm investors’ nerves, with the stock ending the day off by more than 11% at just over 52p – meaning the market value of the firm is down by more than £35million.
Premier is negotiating with lenders to amend its loan covenants and extend the maturity of some of its debt beyond 2017 in return for providing security and increasing returns, while preserving its liquidity.
The company, which continues to have access to undrawn funds from a £2billion revolving credit facility, has deferred its loan covenants on a monthly basis since July.
It had expected negotiations to conclude in the third quarter of 2016 but the talks are still ongoing.
Some backers have reportedly sold out of their syndicated loans to Premier, accepting knock-down prices for their share on secondary lending markets, while others are said to be keen to follow suit.
Premier, whose flagship Solan field achieved first oil in April after long delays, has suffered a brutal start to the week on the stock market.
In a statement yesterday, the firm said: “Premier notes the movement of the share price over the past two days and speculation regarding secondary market activity by the company’s debt holders.
“The company has received assurances that none of its senior lenders represented on the bank creditors’ committee have exited, or are proposing to exit, their loan position at this time.
“There have been no changes to the composition of the bank creditors’ committee.”
It added: “Discussions with the various lending groups on the company’s proposed refinancing continue to progress towards a near term agreement of all parties.”
Premier said it had significant cash and undrawn facilities worth about £650million at June 30 and continued to have access to “undrawn headroom” under its main facility, with the agreement of its banks.
The company said it would provide a further update at the time of its trading and operations statement on November 17.
Recommended for you
