Troubled UK independent Afren inked a recapitalization plan with its lenders Thursday to secure $300 million in funding.
Afren entered the deal with certain noteholders under its 2016 , 2019 and 2020 notes and a majority of the lenders under its existing $300 million Ebok credit facility.
The agreement will result in $300 million of net total funding before the end of June 2015.
The company agreed to a debt-for-equity swap with its bondholders that will have investors holding up to 11 percent of the company’s fully diluted shares, the Financial Times said.
“The recapitalization will result in substantial dilution for existing shareholders,” Afren said.
Under the deal Afren also inked a conditional agreement with noteholders representing 42 percent of outstanding debt for the provision of $200 million in net interim funding in the form of a super senior private placement notes expected to be issued by the end of March 2015.
The company will issue $321 million of new high yield notes that will provide an additional $100 million in net cash.
Afren will also convert 25 percent of its 2016, 2019 and 202 notes into equity with the remaining existing notes being reinstated and extended to 2019 and 2020 at an annual coupon of 9.1 percent.
New shares will be issued to existing noteholders subscribed to the private placement notes and new senior notes.
Afren will also have a $75 million equity offering to all shareholders that will allow them to participate in the recapitalization plan as well as giving the company addition liquidity.
The provision of $200 million of net interim funding and its replacement with the $300 million in high yield notes can be made available without requiring shareholder approval.
The company won an extension for its $300 million Ebok credit facility that will now be extended to 2019.
“2014 was a painful year for Afren and its shareholders. We have responded by putting in place a number of recovery measures and a business plan that focuses on our valuable cash generating production assets in Nigeria and incorporates broad cost cutting measures,” Interim CEO of Afren Toby Hayward said.