Nigeria-focused Seven Energy extends bid to amend 10¼% notes due 2021

By Susanna Moon

Chicago, Nov. 17 – Nigeria-focused Seven Energy International Ltd. has secured consents for 72.06% of its $300 million 10¼% senior secured notes due 2021 as of noon ET on Nov. 17.

Seven Energy also extended the consent solicitation until 4 a.m. ET on Nov. 28 from 4 a.m. ET on Nov. 18.

As announced Oct. 27, the company is asking to pay interest in-kind on the 10¼% notes.

Specifically, the company is soliciting consents to allow for PIK interest on the notes beginning with the Oct. 11 payment date and for the following three interest payment dates on April 11, 2017, Oct. 11, 2017 and April 11, 2018 and for the April 11, 2018 interest payment date, another condition requiring the raising of equity capital, according to a company update.

Seven entered into a lock-up agreement on Oct. 11 with about 77% of holders and another 5% of holders since that date, bringing the total percentage to 82% for those who support the amendments.

The group has fought a challenging business climate that includes increased militant activity in the Niger Delta, continued low oil prices, capacity and liquidity issues in the power sector along with foreign exchange controls and the devaluation of the Naira, the release noted.

The amendments would help the group “to better align its principal and interest payments with expected cash flows in the medium term and to establish a more stable capital structure,” the company said.

If the consent bid fails to go through, the company said it may use a scheme or schemes of arrangement in England and Wales and the British Virgin Islands to implement the proposed amendments.

The consent payment will be $7.50 for each $1,000 principal amount of notes for which a consent is delivered be the end of the solicitation.

The solicitation is contingent on the company securing the needed consents and the subsequent execution of a supplemental indenture.

The information and tabulation agent is D.F. King Ltd. (+44 20 7920 9700, seven@dfkingltd.com or sites.dfkingltd.com/seven).

Some background

As previously announced, the consent solicitation is related to the missed Oct. 11 interest due on its 10½% senior secured notes and the related agreement with 77% of noteholders.

After the missed interest due Oct. 11 on the 10½% notes, the noteholder group had agreed to amend the note terms to allow capitalization of interest payments as follows:

• Automatic capitalization of interest payments due Oct. 11;

• Option to capitalize interest payments due April 11, 2017 and Oct. 11, 2017; and

• Option to capitalize interest payments due April 11, 2018 if operational covenants have been satisfied and Seven Energy has raised at least $50 million of equity by that date.

The company had planned to implement the terms of the agreement by way of an amendment agreement for the 10½% notes and a consent solicitation for the 10¼% notes.

Under the original agreement, the company was required to launch the consent solicitation within five business days of Oct. 11. The noteholders then agreed to extend the timeline until Oct. 26 and then again until Nov. 2.

The energy company is based in Lagos and London.

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