Afren files Chapter 15 case to secure recognition of U.K. proceeding

By Caroline Salls

Pittsburgh, July 6 – Afren plc filed Chapter 15 bankruptcy Thursday in the U.S. Bankruptcy Court for the District of Delaware to gain U.S. court recognition of its U.K. restructuring proceeding.

As previously reported, a majority in number, representing not less than 75% in value, of the holders of Afren’s 11½% senior secured notes due Feb. 1, 2016, 10¼% senior secured notes due April 8, 2019 and 6 5/8% senior secured notes due Dec. 9, 2020 are being asked agree to support the company’s proposed restructuring via a scheme of arrangement.

If the restructuring cannot be implemented because shareholder approvals cannot be obtained, the noteholders are being asked to support an alternative restructuring.

The terms of the company’s proposed scheme of arrangement include:

• Afren would issue $369 million of new high-yield notes due 2017 to refinance and repay bridge securities and to provide an additional $148 million in net cash proceeds to the group;

• About $234 million of the existing notes would be converted into new ordinary shares, representing 80% of the existing issued share capital;

• The remainder of the existing notes will be cancelled and reissued in equal amounts of $350 million each of new notes due December 2019 and December 2020, respectively, with an annual interest rate of 9.1%;

• New ordinary shares would be issued equal to 50% of the issued share capital of the company following the debt-for-equity swap to holders of the new senior notes;

• Up to £49.2 million of new ordinary shares would be issued by way of an open offer to shareholders at 1 pence per open offer share;

• New ordinary shares equal to 10% of the fully diluted share capital of the company following the completion of the open offer would be issued to holders of the new senior notes in order of priority of their agreement to subscribe for the new notes;

• New ordinary shares equal to 5% of the fully diluted share capital of the company following the completion of the open offer will be issued to the holders of bridge securities in partial repayment of those securities;

• The company will enter into an amended term facility with the Ebok lenders, extending the period for repayment of the $300 million Ebok facility until June 2019; and

• Afren will enter into an amended loan agreement with the Okwok/OML 113 lender, extending the period for repayment of the $50 million Okwok/OML 113 facility until June 2019.

According to court documents, Afren has more than $1 billion in both assets and debt. As of March 31, the Afren group said it had net current debt of $1,068,000,000 and cash and cash equivalents of $100 million.

The company is being represented in the Chapter 15 case by Fox Rothschild LLP.

Afren is an oil and gas exploration and production company based in London.

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