LONDON, Sept 21 (Reuters) - Premier Oil’s biggest lender, hedge fund Asia Research and Capital Management (ARCM), plans to auction $200 million of the energy producer’s debt ahead of a $530 million equity raise by the company, three sources told Reuters.
ARCM, which holds more than 15% of Premier’s debt instruments, would retain about $240 million of the company’s debt if the auction succeeds. The bid deadline is set for Friday, one of the sources said.
With net debt of close to $2 billion, Premier is seeking $530 million in fresh equity and needs at least $325 million for its creditors to extend current debt maturities.
A source with knowledge of the matter told Reuters on Friday that the company had received indicative, non-binding support in excess of a targeted $325 million for the capital increase.
Premier is also negotiating with North Sea producer Chrysaor as an alternative to the capital increase.
The Chrysaor talks have not touched on the possibility of Chrysaor acquiring Premier, sources have told Reuters previously, adding that it would not engage in such talks while Premier remains saddled with current debt levels.
ARCM is looking to sell some of the debt because of concerns about Premier’s ability to restructure, one of the sources said.
It is uncertain whether the hedge fund will find buyers for the debt while the company is looking to raise cash, a second source said.
Premier Oil and ARCM declined to comment.
The energy company’s debt is currently valued at 68 cents on the dollar and ARCM aims to sell at 72 cents, two of the sources said.
Its market capitalisation is a little less than 171 million pounds ($219.8 million).
Premier only recently resolved a debt dispute with ARCM after the price for a planned acquisition of some of oil major BP’s North Sea assets was revised down. ($1 = 0.7780 pounds) (Reporting by Clara Denina Additional reporting by Shadia Nasralla and Ron Bousso Editing by David Goodman)
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