LONDON, Jan. 24, 2020 /PRNewswire/ -- ARCM notes Premier Oil's announcement on the convening of scheme meetings to once again extend debt maturity and to approve the making of certain acquisitions. As detailed in ARCM's press release on 7 January 2020, ARCM has highlighted a number of concerns relating to these proposed acquisitions, which ARCM believes will expose the Company and its business to significant incremental risks (see Link).
ARCM's opposition to these proposed acquisitions has to be considered within the context that ARCM has not previously opposed any of the Company's consent requests involving investments since it became a lender to the Company in 2016.
Upon a review of the Company's January 7 presentation, ARCM notes that there are a number of important details which are unclear yet are critical to enable stakeholders to meaningfully assess the merits of the acquisitions.
For the benefit of all the Company's stakeholders, over the next few weeks, ARCM will pose a series of questions to the Company relating to the acquisitions. We call upon the Company to provide full and transparent responses to its stakeholders.
To begin, we refer to the Company's statement:
"Acquisitions forecast to generate >US$1bn FCF to end 2023"
As shown below, on p4 of the January 7 presentation, the Company made the following statement (Link):
Materially strengthens long-term financial position:
- Acquisitions forecast to generate >US$1bn FCF to end 2023
Whilst this statement has been widely quoted by the press and sell side analysts in the coverage of the proposed transaction, we believe stakeholders need to have the answers to the following questions to fully understand how much of this FCF will flow to Premier and its stakeholders:
1) Since the transaction is back dated to January 1, 2019, is it accurate that cash flows until the closing of the Andrew and Shearwater transactions (estimated to be 2Q-3Q 2020) will remain with BP?
2) What is the estimated cash flow that will stay with BP which would reduce the ">US$1 bn FCF to end 2023" that is actually available to Premier and its stakeholders?
3) From the proposed transaction closing date in 2Q-3Q 2020 to the end of 2023, how much cash would be available to Premier and its stakeholders at the current forward curve for oil and UK gas prices?
For more information: Please visit www.arcm-premieroilscheme.com.
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SOURCE Asia Research Capital Management (ARCM)