Petroleum Africa
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Wednesday, January 28, 2015
Afren is looking for a way to make the ends meet as oil prices drop and its drilling effort in Kurdistan comes up dry. The company is now in talks with its largest bondholders over its liquidity and funding needs.
Afren has seen its share price drop significantly over the past few months, knocking an estimated $213 million off its market value. Afren said its funding requirements were likely to exceed its market value if its debt remained unchanged.
“The company has been advised that an ad hoc committee of its largest bond holders has been formed,”Afren said in a statement. “The company has initiated discussions with the advisers to the committee regarding the immediate liquidity and funding needs of the business.”
The company has attracted the interest of Seplat Petroleum, a Nigerian indigenous firm. Afren said it was still in merger talks with the company. Seplat began its courting of Afren in December anddiscussions between the two are continuing following an extension granted by the UK Takeover Panel to January 30, for the companies to make a final decision.
Under Rule 2.6(a) of the UK City Code on Takeovers and Mergers, Seplat, which is also listed on the LSE, had up till January 19, to either announce a firm intention to make an offer under Rule 2.7 of the code or announce that it does not intend to make an offer before the extension was granted. Seplat said the consent of the UK Takeover Panel for an extension enables the parties to continue their on-going discussions
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