Seven Energy mandates Standard Chartered for USD 385m refinancing, considers divestments – CFO

09 Jun 16 – Seven Energy, a private Nigerian oil and gas company, has mandated Standard Chartered to arange the refinancing of its midstream infrastructure debt, and is also considering divestments, said Bruce Burrows, chief financial officer (CFO).

Seven Energy is looking to raise USD 385m in debt to refinance a USD 450m existing facility that is currently drawn down to USD 385m and matures in 2019. The loan was raised in part to refinance previous debt, and in part for capex purposes, Burrows said. 

The providers of the original loan are Ecobank, First Bank of Nigeria (FBN), FBN UK, First City Monument Bank, Union Bank, Union Bank UK, and United Bank for Africa.

Seven Energy is in talks with both development finance institutions and international commercial banks for the refinancing, Burrows said.

The company is looking to raise the debt in two tranches, Burrows said, declining to specify the amounts the company is looking to raise in each tranche. It is hoping to secure the full amount by the end of 2017, he added.

Additionally, Seven Energy is evaluating its portfolio and considering disposals, Burrows said.

The company has a portfolio of upstream and midstream assets in Nigeria. In the north west Niger Delta, Seven Energy has interests in OMLs 4 (with a 55% share), 38 (55%) and 41 (55%), and OPLs 905 (90%), 907 (41%) and 917 (42%) in the Anambra basin. Seven Energy’s assets in the south east Niger Delta region consist of the Uquo (40%) and Stubb Creek fields (51%).

Seven Energy’s wholly-owned midstream business, Accugas, focuses on sales and marketing, processing and distribution of gas to the domestic Nigerian market through its gas processing and distribution infrastructure.

In its 1Q16 results, Seven Energy registered a loss after tax of USD 14m, and cash flow provided by operating activities amounted to USD 36m, according to a company announcement.

In February, Seven Energy announced the closure of a USD 100m equity raise. This comprised USD 50m from existing shareholders of the company, and USD 50m invested by the IDB Infrastructure Fund II, sponsored by the Islamic Development Bank and other institutional investors, the company said at the time.

In May S&P Global Ratings lowered Seven Energy’s long-term corporate credit rating to CCC+ from B-.

The downgrade reflected the deterioration of Seven Energy’s prospective liquidity position on the back of an unexpectedly prolonged shutdown of the Trans Forcados export terminal (owned by Shell). Seven Energy’s oil sales are heavily reliant on this terminal, S&P noted at the time.

The company’s legal advisers are Addleshaw Goddard and Linklaters, and its auditor is Deloitte.  

By Katie McQue

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