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