PA Resources gets bondholder OK to defer interest payments to March 31

By Susanna Moon

Chicago, Feb. 26 – PA Resources AB said bondholders approved the proposal to further defer interest payments on its NOK-denominated and SEK-denominated bonds to March 31 as well as to obtain a temporary waiver of its bond loan financial covenants.

The proposal was approved by 99.86% of the votes by writing for the SEK bonds and was unanimously approved at a meeting held Wednesday for the NOK bond, according to a press release.

As previously announced, the company sought to defer paying interest on the bonds, including those owed to PA Resources’ largest creditor and shareholder, the Gunvor Group.

The meeting and proposal was announced Feb. 10.

The company previously said it needs more time to prepare a long-term business and financing plan as a result of the termination of its Didon transaction with EnQuest plc and the substantial decline in oil prices.

As previously reported, the interest payments were originally due in October and were deferred to February.

PA Resources said it has held dialogue with an informal committee of bondholders and Gunvor Group since October regarding the long-term business and financing plan of the company that addresses its upcoming investment program and debt position.

However, PA Resources’ transfer of 70% of its interest in each of the Didon producing oil field and the Zarat permit to EnQuest was terminated and reversed on Jan. 31. Consequently, $23 million held in escrow was returned to EnQuest.

Despite the payment deferral request, the company said the majority of the bondholders will be entitled to bring the interest payment date forward to an earlier date with a three-business-days’ notice period. The interest payment date may also be brought forward to an earlier date if notice is given or payments or settlement of any amounts are made under facilities with Gunvor.

The amount of the interest payments due in October will carry an additional interest rate during the period from the original due dates to March 31, the release said.

Covenant waiver request

PA Resources said it expects an impairment loss of SEK 2.1 billion will be recorded in its 2014 year-end report. The impairment charge means that the company will be in breach of its financial covenants for its SEK-denominated and NOK-denominated bond loans. As a result, the company will request covenant waivers until March 31.

In addition, the company said the Gunvor Group agreed that unpaid interest and any interest due before March 31 on working capital and reserve-based lending facilities will be deferred and carry interest of 7½% until March 31, conditional on the bondholders’ acceptance of the proposed changes and with an equivalent right as the bondholders to bring the facilities’ interest payment dates forward.

Report, meeting postponed

According to a separate news release, PA Resources decided to postpone the publication of its annual report until April 29 and postpone its annual general meeting and the publication of the interim report for the first quarter of 2015 until May 29.

This decision was made in light of the ongoing refinancing discussions.

PA Resources is an oil and gas company based in Stockholm.

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