Premier Oil is a London-listed upstream oil and gas company with interests in ten countries around the world. We have been advising the company on a broad range of matters for over 25 years, including its recent acquisition of Oilexco North Sea Limited (ONSL) during its administration.
Our team comprised lawyers with significant experience in oil and gas from our M&A, Equity Capital Markets, Financing and Corporate Recovery and Insolvency groups. It was led by Hywel Davies who, over many years, has developed a close relationship with Premier's senior management.
To provide maximum flexibility and access to the significant tax losses in ONSL, the acquisition proceeded initially as a share acquisition but was structured in a way that would allow the switch to an asset purchase at a reduced price if the voluntary arrangement for ONSL was not satisfied by a cut-off date.
Since this was a purchase from an administrator, we knew we would not be able to get representations, warranties or other indemnities. Instead, we creatively protected Premier's commercial interests by including termination and price adjustment provisions in the agreements. These provisions could be used in certain circumstances, including if any interest in certain key specified oil fields was revoked, forfeited or terminated before completion.
In addition to the main aspects of the acquisition, we advised Premier on its debt and equity funding for the acquisition. The debt element involved negotiating - under very difficult market conditions - new and complex credit facilities worth $525 million. The raising of approximately $252 million pursuant to a rights issue was very well received by the market as it was one of the few equity raisings to fund an acquisition rather than shore up a company's balance sheet. There was a 94.9% take-up to the rights issue.
We also worked closely with the administrators and their lawyers on the voluntary arrangement and related insolvency issues in what was the first rescue of an oil exploration and production company of this size.
Premier was delighted that the acquisition was successfully completed - by delivering critical mass in a second core area, the North Sea, it had compelling strategic, operational and financial rationale for the company. The acquisition was acknowledged by the Chairman as the "most exciting development in Premier's recent history".