Premier Oil yesterday hailed support for a plan to restructure a $245million (£199million) tranche of its £2.3billion debt pile that would extend terms for a further five years.
But one bondholder hit out at the oil and gas explorer claiming it is “deeply dissatisfied” with its refinancing proposal and warned the North Sea explorer could face legal action putting its wider debt restructuring plan at risk if it did not improve its terms.
Yesterday Premier had said an “ad hoc” committee made up of seven of its bondholders – who own 47% of the convertible bonds – had “locked up” to the terms of the deal. This involved an extension of the bonds’ maturity date to the end of May 2022, with the interest rate remaining flat at 2.5% and no charges to change the deal.
Pyrrho Investments made the unusual move last night of releasing a public statement criticising Premier’s plans to restructure the debt.
Pyrrho, an investment fund owned by a Hong Kong based property investment and development family, owns 10% of the bond securities. It claimed the deal put bondholders in an “undesirable subordinated position.
It also accused Premier and its representatives of a “lack of transparency and poor communication” in the restructuring process, claiming it had not been included in the ad hoc committee despite making “proactive” approaches to Premier’s investment bank Moelis & Company.
It is thought Premier will press ahead with the agreement and is confident of winning support from 75% of the bondholders when it sets out the plan at an extraordinary meeting that will be held at a future date.
It added that if fewer than 50% agreed on the deal it would implement an “alternative mechanism” that would be “materially less advantageous for convertible bondholders than those set out above”.
Pyrrho, which is thought to have recently acquired its bonds in Premier, called for other bond holders to join forces with it to reject the deal.
It also warned that Premier’s “alternative mechanism” “may be subject to legal challenge”.
Pyrrho added: “This would lead to a lengthy period of uncertainty for Premier Oil, placing its debt restructuring plan in doubt and delaying the company’s re-entry as a participant in normal capital markets.”
The deal comes a few weeks after Premier said had set out terms with 40 different banks for the rest of its estimated £2.3billion net debt which it expects to confirm in May. The company has been in talks to restructure its debt for over a year.
Premier Oil’s shares closed 6% lower to 65.25p.
