Key terms of the refinancing
The RCF, term loan, US Private Placement notes (USPP) and Schuldschein notes
Proposed amendments have been agreed with the Coordinating Committee of the RCF Group and representatives of the other Private Lenders as follows:
- Confirmation of total existing facilities of US$3.9bn with undrawn capacity preserved
- Alignment of final maturity dates to 31 May 2021
- Amendment of Premier’s financial covenants, currently anticipated to be
- Net debt to EBITDA cover ratio reset to 7.5x until end 2017 reducing to 5.0x at the end of 2018, before returning to 3.0x in 2019
- Interest cover ratio reduced to 1.85x before increasing to 3.0x in 2019
- Covenant net debt (which includes issued letters of credit) to be less than US$2.95bn by end 2018
- Enhanced economics to lenders, including
- A margin uplift of 1.5% over existing pricing with an additional 1.0% for the Schuldschein lenders for conversion of their existing bilateral facilities into an English law syndicated facility
- Amendment fees of 1.0% with an additional 0.5% for the Schuldschein lenders
- Equity warrants representing up to 90 million new shares, being 15% of Premier’s issued shares (enlarged for the potential new issue) at a price of 42.75 pence per share, equivalent to 7.6% dilution based on the latest closing share price. The warrants will have a five-year term. Alternatively, lenders will have the option to take up synthetic warrants in the form of a deferred fee of comparable value to the equity warrants. Take up of the synthetic warrants will reduce the number of underlying new shares to be issued under the equity warrants
- Crystallisation of the make-whole on the USPP to be calculated at the completion date of the refinancing
- A security package which provides priority over unsecured creditors; in addition a portion of the RCF and certain other debt obligations of up to US$800m will receive super senior status
- Certain governance controls including
- Annual approval of Premier’s overall capex and exploration budgets
- Final sanction of significant new projects
- Certain approval rights in respect of acquisitions and disposals
The retail bonds
substantially the same economic terms are being offered to the retail bondholders as to the Private Lenders. The key terms proposed are:
- Maturity date extended by six months to 31 May 2021
- Enhanced economics comprising an interest rate uplift of 1.50%, amendment fees of 1.0% and pro rata participation in the warrant offering as above
- Participation in the security package which gives priority over unsecured creditors, ranking alongside the private debt facilities (with senior status)
Premier has agreed key amended terms with certain significant bondholders and advisers to an ad hoc committee of the convertible bondholders. Full details of these terms will be circulated to the wider convertible group. The amended terms remain subject to review and agreement by the Private Lenders and their representatives.
Implementation of the proposed refinancing
Premier plans to enter into lock up agreements in relation to the long form term sheet with Private Lenders by the end of February. Revised refinancing and implementation documents will now be finalized with completion for the refinancing anticipated by the end of May 2017.
The proposed RCF, term loan and USPP amendments will be effected through a Scottish scheme of arrangement of each of Premier and Premier Oil UK Limited (the Schemes), which must be approved by a majority in number and 75% in value of Scheme creditors attending and voting at the meetings (the Scheme Meetings).
Schuldschein lenders and the convertible bondholders will each consent to the terms of the Oil refinancing outside of the Scheme process.
The refinancing will require shareholder approval in respect of the potential issue of the warrant shares and shares that could be issued as a result of the change to the convertible bond conversion price. That approval will be sought at a general meeting.