Afren Gets Payment Extension from Creditors
Few weeks after it terminated take-over talks with Seplat Petroleum Development Company Plc, financial crisis-ridden Afren Plc has stated that some of its creditors had given it another payment extension.
This is coming few hours after China’s Fosun International Ltd was said to be backing a take-over bid for the company.
Afren said lenders of a $300 million facility had agreed to defer a $50 million amortisation payment until March 31, 2015 after the initial extension from January deadline to February 27, 2015. Afren’s gross debt stood at about $1.15 billion as of September 2014 and the company also said it was still using a 30-day grace period for $15 million in interest that was due on February
“In light of the company’s current liquidity position and in order to preserve cash while the review of the company’s capital structure and funding alternatives is completed, the Board has decided, at the expiration of the 30-day grace period, not to pay $15million of interest which was due on February 1, 2015 under its 2016 Notes. While such non-payment will result in a default under the 2016 Notes, this will not result in an immediate obligation to repay such 2016 Notes or any cross-default under its 2019 Notes or 2020 Notes or its other debt facilities,” the company said. The company said it had received assurances from the ad hoc committee, which members hold in aggregate approximately 55 per cent of the principal face amount of the 2016 Notes and 44 per cent of the total principal face amount of the 2016 Notes, 2019 Notes and 2020 Notes.
According to the company, the committee has no current intention to take enforcement action with respect to the 2016 Notes held by its members as a result of the failure to make payment of interest due under the 2016 Notes.
This according to the company is in the hope and expectation that agreement can shortly be reached with the company and its key stakeholders on the terms of a consensual restructuring that would preserve the Group and its business as a going concern for the benefit of all stakeholders.
The company said it was continuing constructive discussions with the advisers to, and members of, the ad hoc committee of its largest bond holders, the coordinating committee of the lenders under its $300million Ebok debt facility and its other lenders regarding the immediate liquidity and funding needs of the business.
“It is expected that any agreement with the company’s bond holders and debt providers regarding the provision of interim and longer term funding and a broader consensual restructuring is likely to result in economic terms associated with the new funding and/ or the issue of new equity which will substantially dilute the interests of the company’s current shareholders,” the statement added.
The company added that while it is also having discussions with its other stakeholders and third party investors regarding interim funding and recapitalising the company, the Board believes that an agreement between the creditors would present the most likely solution to the immediate issues facing the business. The Nigerian Electricity Regulatory Commission (NERC) has said old-fashioned business model, which emphasised on deliberate electricity mispricing and entrenchment of inefficient production and consumption are responsible for acute shortage of electricity in Nigeria.
NERC, which described as false, claims that it is more of a tariff making commission, spoke of its determination to drive up growth in electricity production and consumption in the country, using the right tariff structure. Chairman of NERC, Dr. Sam Amadi said following consumers’ complaints of raise in electricity rates, that without the right business model, the huge capacity gap in Nigeria’s electricity industry will linger notwithstanding her endowment in various natural resources for electricity generation.
Amadi said at a recent electricity consumers’ forum in Abuja that the years, Nigeria has failed to properly align the prices paid for electricity with