EnQuest seeks consents to ease terms of £155 million 5½% notes due 2022

By Susanna Moon

Chicago, April 10 – EnQuest plc said it began a consent solicitation for its outstanding £155 million of 5½% notes due Feb. 15, 2022.

The company is soliciting consents to amend the financial covenants so that through Dec. 31, 2016:

• The leverage ratio cap is raised to 5 times, from 3 times; and

• The ratio of EBITDA to finance charges limit is dropped to 3 times, from 4 times.

The company also is seeking to amend the terms so that if the leverage ratio is more than 3 times after the covenant amendment end date, interest for the immediate following period will be 7% per year.

The proposals seek to bring the financial covenant terms of the notes in line with the amended covenants in the company’s secured revolving credit facility, as announced on Jan. 23, according to a company press release.

The financial covenants in the notes would revert to their current levels on June 30, 2017, the release noted.

The consent fee will be 0.2%, which will be paid in one installment at settlement if the measure passes and the supplemental trust deed has been executed.

The solicitation will end at 5 a.m. ET on May 1.

The company will hold a meeting for holders in London at 5 a.m. ET on May 5.

The company said that while it believes that it will be able to operate within its borrowing limits, more sustained slumps in the oil price or other problems would reduce headroom and could affect the group’s ability to implement its capital expenditure program.

“This is a prudent and precautionary step to provide us with the flexibility to complete the capital expenditure program that will significantly enhance the group's production and cash flow,” the company’s chief executive officer Amjad Bseisu said in a press release.

“This brings the leverage ratio in the notes in line with our revolving credit facility while offering noteholders a coupon of 7% if the leverage ratio is three times or above.”

The company has received initial indicative support from noteholders representing about 42% of the outstanding notes, the release noted.

Lucid Issuer Services Ltd. (enquest@lucid-is.com, +44 0 20 7704 0880, David Shilson) is the tabulation agent.

The notes were issued under the company’s £500 million euro medium term note program.

EnQuest is a London-based petroleum exploration and production company.

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