UK exploratory firm Premier Oil today pushed back against claims that it is under pressure from its lenders to sell of its assets as the repayment date for $2.6bn (£1.9bn) worth of loans approaches.
The Sunday Telegraph reported that a group of hedge funds, which own in total around 40 per cent of Premier’s loan book, have tapped investment bankers Lazard and law firm Akin Gump to push for the break-up.
Premier Oil declined to comment, but later tweeted that the reports were “factually incorrect and misleading.”
Sources told the Sunday Telegraph that the independent oil firm, which has until May 2021 to repay its loans, is hoping to refinance the debt before May 2020.
Premier is seeking to avoid complications in having auditors sign off its accounts.
Premier Oil has sought to trim its massive debt, the legacy of a drawn-out restructuring process in 2017, throughout the year.
In August the firm announced it would sell its Zama field off the coast of Mexico, which was valued at $439m by Jefferies analysts.
Due to the size of their stake, the hedge funds can block any debt restructuring move that Premier might attempt.
Another hedge fund, Hong Kong’s Asia Research & Capital Management (ARCM), has built up the largest ever short position in UK history against Premier Oil.
Although the bet should have been disclosed when it rose over 0.5 per cent, it was only when it reached 17 per cent – or £132m – that the position was revealed to the Financial Conduct Authority.
The move is seen as insurance against ARCM’s $380m holding of Premier’s debt. According to analysis from Breakout Point, it is the largest such position in Europe.
In a trading update in November Premier announced that it had reduced its net debt by $300m in 2019, in line with its expectations for the year.
At the time, chief executive Tony Durrant commented: “We continue to deliver on our strategic priorities. We are generating significant free cash flow, which is materially deleveraging our balance sheet.”