Afren has announced that its board has decided, at the expiration of the 30 day grace period, not to pay US$15m of interest which was due on 1 February 2015 under its 2016 Notes in view of the Company’s current liquidity position and in order to preserve cash while the review of the Company’s capital structure and funding alternatives is completed.
Afren adds that the ad hoc committee which members hold in aggregate approximately 55% of the principal face amount of the 2016 Notes and 44% of the total principal face amount of the 2016 Notes, 2019 Notes and 2020 Notes has assured to take enforcement action with respect to the 2016 Notes held by its members as a result of the failure to make payment of interest due under the 2016 Notes.
The committee says it hopes and expects that agreement can shortly be reached with the Company and its key stakeholders on the terms of a consensual restructuring that would preserve the Group and its business as a going concern for the benefit of all stakeholders.
Afren says it is continuing constructive discussions with the advisers to, and members of, the ad hoc committee of its largest bond holders, the coordinating committee of the lenders under its US$300m Ebok debt facility and its other lenders regarding the immediate liquidity and funding needs of the business.
“It is expected that any agreement with the Company’s bond holders and debt providers regarding the provision of interim and longer term funding and a broader consensual restructuring is likely to result in economic terms associated with the new funding and/or the issue of new equity which will substantially dilute the interests of the Company’s current shareholders,” the company said in a statement.
The Company is also having discussions with its other stakeholders and third party investors regarding interim funding and recapitalising the Company.