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Premier Oil lands long-awaited deal on £2.8bn debt pile
Premier Oil lands long-awaited deal on £2.8bn debt pile
<source: The Telegraph>

Premier Oil has agreed a deal to reset its £2.8bn of debt after nine months of complex negotiations with its lenders.

The long-awaited deal hits the reset button for the struggling North Sea explorer by relaxing the debt covenants that loomed over the company during a two-year oil market downturn that wiped 80pc from its market value.

The agreed terms also guarantee a $4bn debt facility for the next four years and push its maturities out to 2021, allowing the explorer to move ahead with developing projects that hold a potential 700 million barrels of oil reserves.
Premier chief executive Tony Durrant said the deal was “a significant milestone”.

“We’ve broken the back of it and we don’t expect this deal to change while we move through the final stages,” Mr Durrant said.

The share price reaction to the deal was muted as investors had largely anticipated the outcome. 

Premier shares climbed 1.5pc on Friday to just above 87.6p, capping a 70pc rise in a little over two months, and more than triple the price this time last year when oil markets hit 12-year lows.

The final deal documentation will be circulated around the lender group for formal credit committee approval before the end of the month.  

“We are grateful for our lenders’ continued support, which reflects the high quality nature of our asset base, the strong recent operating performance and our plans to deliver value for all of our stakeholders,” he added.

In return Premier’s lending syndicate, which includes more than 75 banks, will be offered equity warrants worth $50m at the company’s current market price as well as slightly higher interest payments on the debt.

The lenders will also be given oversight of Premier’s annual spending plans, but Mr Durrant said only very extreme unforeseen costs are likely to raise concerns.

“It’s a reasonable compromise for the lenders who have continued to support us through this process,” Mr Durrant added.
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