Premier Oil shares crash as it re­veals plans to raise £530m

The Daily Telegraph - Business - - Business - By Ed Clowes

PREMIER OIL shares crashed by a quar­ter af­ter the com­pany re­vealed plans to raise $530m (£405m) on the stock mar­ket as it bat­tles to shore up its fi­nances.

The en­ergy busi­ness is to tap up in­vestors for the life­line as part of a deal with its lenders to re­fi­nance a $2.9bn debt pile, fol­low­ing a col­lapse in the oil price as Covid-19 lock­downs brought nor­mal life to a halt.

Bosses are hop­ing to raise more than Premier’s £258m mar­ket value. The an­nounce­ment sent shares plung­ing 25pc to 23.44p amid fears ex­ist­ing in­vestors will be ham­mered by the pro­pos­als.

Premier also re­vealed a $334.8m pre­tax loss for the six months to June 23. It made a $119.9m profit a year ear­lier. Rev­enues fell 36pc to $530.6m.

Premier has suf­fered badly from a plunge in the price of oil, with Brent crude col­laps­ing from around $60 a bar­rel a year ago to as lit­tle as $19 at the height of the pan­demic as driv­ers stayed home and busi­nesses shut.

The firm had faced a dead­line of May 2021 to agree a new deal with cred­i­tors. Its lat­est agree­ment will lift the un­cer­tainty but Premier must raise at least $300m to get it over the line.

It is seek­ing an­other $230m to pay down debt and fund an ac­qui­si­tion of BP’s oil and gas fields in the North Sea.

The new deal with cred­i­tors will run un­til 2025 and cut in­ter­est pay­ments.

The com­pany has been in a race against time this sum­mer, with in­sid­ers afraid it would breach agree­ments with lenders over its debt when key fi­nan­cial ra­tios were tested at the end of June.

The group said yes­ter­day that the new ar­range­ment gives it enough breath­ing space to avoid this clash.

Tony Dur­rant said that he had agreed the debt terms with the com­pany’s committee of cred­i­tors, rep­re­sent­ing 45pc of lenders. Now, the chief ex­ec­u­tive must go to the wider cred­i­tor group, of whom 75pc must be in favour.

Premier will com­plete the BP deal at the same time as it se­cures funds from the stock mar­ket later this year.

The raise is likely to hap­pen in Novem­ber or De­cem­ber.

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