Seven Energy International Limited, the leading integrated gas company in south east Nigeria, with upstream oil and gas interests in the region, and its wholly-owned subsidiaries, including Seven Energy Finance Limited (the “Issuer”) and Accugas Limited (together “Seven Energy” or the “Group”) has provided a liquidity update.
As referred to in previous announcements, Seven Energy’s short term liquidity has been severely affected by a range of external factors, including:
- loss of material cash flow from the SAA since February 2016 because of recurrent militant activity that has resulted in the Forcados export terminal being closed;
- a significant backlog of unpaid invoices relating to the supply of gas to Nigerian Federal and State owned power stations;
- delay in the finalisation and effectiveness of the World Bank Partial Risk Guarantee which will indemnify Seven Energy for up to US$112 million of invoices for gas supply to Calabar NIPP, the Group’s principal gas offtaker; and
- a severely restricted ability to convert Nigerian Naira into US Dollars.
The combination of these adverse external factors has resulted in continued significant pressure on the Group’s liquidity. As a result of this, Seven Energy has requested a standstill from its lenders under the US$385 million Accugas term facility dated 23 June 2015 and has not made payments of interest and principal due thereunder on 31 March 2017. In addition, in light of certain external factors referenced above, Seven Energy has not met the conditions to pay PIK interest on the next coupon date under the under the $300,000,000 10 ¼ % senior secured notes due 2021 (REG. S ISIN: XS1093755194 / 144A ISIN: XS1093754387) (the “SSNs”) and the US$100,000,000 10 ½ % notes due 2021 (ISIN USG80688AC17) (the “10 ½ % Notes”). The Issuer does not currently anticipate that it will be in a position to make the interest payment which will become due under the SSNs and the 10 ½ % Notes on 11 April 2017.
The Group, who are being advised by EY, are in constructive discussions with potential investors and lenders with a view to introducing additional capital as part of a comprehensive capital restructuring. The aim of this restructuring is to reduce aggregate Group borrowings, extend the tenor of certain debt facilities and convert certain US Dollar denominated debt facilities into Naira denominated facilities to better align the currency of the Group’s operating cashflows and debt service.
While broader restructuring and strategic options are considered, the Group is in parallel discussions with all of its creditors, including an ad hoc group of holders of the SSNs (who are being advised by Moelis & Company and White & Case), with a view to obtaining formal or informal agreements to standstill in relation to any defaults arising under their finance agreements.
Source: Press Release