ARCM Confirms it Will Appeal Premier Oil Schemes of Arrangement

LONDON, April 29, 2020 /PRNewswire/ -- ARCM will lodge an appeal with the Inner House of the Court of Session in the coming days against the sanction of the proposed schemes of arrangement.

This will have the effect of staying the schemes until that appeal is resolved. 

Sanction was granted without live evidence from either Premier Oil's or ARCM's witnesses and was granted in spite of the material change of circumstances arising from the collapse in oil and UK gas prices since November 2019 when the transactions were first proposed to creditors.

Whilst the scheme process has thus far expended valuable time and resources on the part of all parties involved, ARCM reiterates that there is no value in pursuing the acquisitions and the proposed $500 million rights issue which are neither viable nor executable, particularly given the current circumstances facing the global energy markets. It is important to note that pursuant to the scheme proposals the schemes cannot become effective without a minimum equity raise of $350 million. As per our previous statements, Premier Oil should abandon the acquisitions and focus on its cash flow position and protecting the balance sheet as a matter of priority.

To underscore the urgency, ARCM refers to its statement from 12 March 2020 (available here) regarding Premier Oil's cash flows in the lower oil and gas price environment. ARCM notes that oil and UK gas prices have since fallen further by approximately 25%^[1], thereby increasing the cash flow urgency. The market is beginning to recognise these risks with the Company's debt securities (including those held by ARCM) priced at levels showing substantial creditor impairment, for example the retail notes which have been quoted in a range of 50 cents or below since mid-March^[2].

Accordingly, ARCM calls on the Company to work constructively with its creditors to urgently address its covenant position in light of ongoing oil price weakness^[3], as well as measures for maintaining sufficient liquidity. We hope that by working with its creditors, Premier Oil will be able to significantly reduce leverage and move forward with a sustainable balance sheet.

[1] Calendar 2020 Brent oil and UK gas are down approximately 25%

[2] According to Bloomberg data

[3] As indicated in Premier Oil's Trading Update 13 March 2020

Contact:

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