London Office Advises Bondholders on $2.8 Billion Restructuring of Premier Oil plc

August 1, 2017

Willkie’s restructuring team in London advises holders of convertible bonds on the largest and most complex restructuring of a North Sea oil company to date.

Premier Oil plc (listed on the London Stock Exchange and one of the biggest independent oil companies in the UK) together with its subsidiaries (the “Premier Oil Group”) announced the completion of the refinancing of the Premier Oil Group’s outstanding debt of $2.8 billion on July 28. The Premier Oil Group has oil and gas operations in the North Sea, South East Asia, Pakistan, the Falkland Islands and Latin America.

In the wake of strained financial performance as a result of the prolonged low oil price environment and impending maturities on its heavy debt burden, the Premier Oil Group had been in negotiations with its main financial creditors since March 2016 in relation to an amendment and extension of its outstanding debt of $2.8 billion, all of which was unsecured. In July 2016 Willkie was engaged by an Ad Hoc Group of holders of the structurally subordinated $245 million 2.5% convertible bonds, due 2018, issued by an SPV subsidiary (Premier Oil Finance (Jersey) Limited) and guaranteed by Premier Oil Plc (the “Convertible Bonds”). The Ad Hoc Group represented approximately 48 percent of the Convertible Bonds. Premier Oil Group’s other debt, which was structurally senior, comprised an RCF, term loan, Schuldschein loans and US private placement notes (the “Senior Creditors”).

Along with financial advisors, Moelis & Company, Willkie negotiated the successful refinancing of the Convertible Bonds with the Premier Oil Group (advised by Slaughter and May and Rothschild) and the Senior Creditors. The key amendments agreed for the Convertible Bonds included an extension of the maturity date to 2022, a favorable reset of the conversion price and the provision for interest at 2.5 percent to be paid in the form of newly issued shares – all subject to the terms of an intercreditor agreement to be entered into with the Premier Oil Group and the Senior Creditors. Instead of receiving a cash fee for supporting the refinancing, Convertible Bondholders could elect to receive equity warrants representing up to three percent of Premier Oil plc’s issued share capital.

The Senior Creditors were granted security by the Premier Oil Group in return for extending the maturities on their debts, the amendments to which were implemented by way of a Scottish scheme of arrangement and a conversion of the German law Schuldschein loans into a new English law facility.

Willkie advised the Ad Hoc Group of Convertible Bondholders on entering into a lock up agreement to support the refinancing (including the requirement to “block” the clearing systems accounts in which their Convertible Bonds were held) and on the voting procedure for approving the amendments to the Convertible Bonds by way of written resolution. Approximately 90 percent of Convertible Bondholders locked up and voted in favor of the refinancing and Willkie ultimately assisted all of these Convertible Bondholders through the refinancing process, in addition to the Ad Hoc Group of clients.

The Willkie London team included Business Reorganization and Restructuring: partner Graham Lane and associates Iben Madsen and Alexander Roy, with assistance from Corporate: partner François Feuillat, UK partner Sebastian FitzGerald and associates Jennifer Tait and Aymen Mahmoud, and Tax: UK partner Judith Harger.