Premier Oil will issue discounted shares to activist hedge fund ARCM representing 8.91% of the company to pay for North Sea assets from BP, which agreed to reduce the price, Premier said on Friday.
ARCM, which owns around 15% of Premier's debt and has a large short position in its shares, has agreed to drop its appeal against a court scheme to facilitate Premier buying the BP assets, Premier said.
The deal will involve Premier paying BP $210 million in cash and reduces Premier's liability for field abandonment to $240 million from $600 million.
It replaces an initial scheme which would have involved a broader capital raising to pay the initial price of $625 million and extend Premier's debt maturities by two years.
"We are pleased to have agreed revised terms with BP for the proposed acquisition of the Andrew Area and Shearwater assets," Premier CEO Tony Durrant said, pointing to a plan to waive debt covenants until September.
"The (...) Agreement, once agreed with and approved by lenders, will provide a basis for the Company to continue discussions regarding proposed amendments to the Group's existing credit facilities."
Premier, which had a market capitalization of $336 million as of Thursday and $1.9 billion in net debt, will issue 82.2 million new shares to ARCM at a price of 26.69 pence each, a 9.64% discount to the volume-weighted average price over the last five days to fund the BP assets, it said.
(Reporting by Shadia Nasralla; editing by Jason Neely)
