Afren PLC Interim Management Statement -3-
May 29 2015 - 1:00AM
UK Regulatory
spare parts and materials 8.8 (13.4)
Investment inflow - 0.2
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Net cash used in investing activities (203.2) (139.3)
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Issue of ordinary share capital - share-based
plan exercises - 1.4
Purchase of own shares - (3.1)
Proceeds from borrowings - net of issue costs - 98.5
Repayment of borrowings and finance leases (13.5) (86.6)
Interest and financing fees paid (3.3) (16.9)
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Net cash used in financing activities (16.8) (6.7)
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Net decrease in cash and cash equivalents (136.0) (31.8)
Cash and cash equivalents at beginning of the
period 236.5 389.9
Effect of foreign exchange rate changes - 2.6
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Cash and cash equivalents at end of period 100.5 360.7
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Unaudited condensed consolidated statement of changes in
equity
Three months ended 31 March 2015
Attributable
Share to equity
Share premium Merger Other Accumulated holders Non-controlling Total
capital account reserve reserves losses of parent Interest equity
US$m US$m US$m US$m US$m US$m US$m US$m
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At 1 January 2014 19.1 926.8 179.4 27.5 642.0 1,794.8 10.7 1,805.5
Issue of share capital - 1.4 - - - 1.4 - 1.4
Share based payments
for services - - - 4.0 - 4.0 - 4.0
Exercise and lapse
of warrants designated
as financial
liabilities - - - 0.1 (0.1) - - -
Purchase of own shares - - - (3.1) - (3.1) - (3.1)
Profit/(loss) after
tax for the period - - - - 74.3 74.3 (1.8) 72.5
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Other comprehensive
loss for the period - - - (0.1) - (0.1) - (0.1)
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Balance at 31 March
2014 19.1 928.2 179.4 28.4 716.2 1,871.3 8.9 1,880.2
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At 1 January 2015 19.2 929.3 - 118.0 (800.1) 266.4 (17.2) 249.2
Share based payments
for services - - - 3.2 - 3.2 - 3.2
Loss after tax for
the period - - - - (52.0) (52.0) (1.1) (53.1)
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Other comprehensive
loss for the period - - - (32.2) - (32.2) - (32.2)
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Balance at 31 March
2015 19.2 929.3 - 89.0 (852.1) 185.4 (18.3) 167.1
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Notes to the condensed consolidated financial statements
Three months ended 31 March 2015
1. Basis of accounting and presentation of financial
information
The condensed Group interim financial statements, comprised of
Afren plc ("Afren") and its subsidiaries (together, "the Group"),
have been prepared in accordance with the same accounting policies,
presentation and methods of computation as applied in the audited
financial statements for the year ended 31 December 2014, with the
exception of taxes, which have been calculated using the estimated
full year effective tax rate. The Group policies are in accordance
with International Financial Reporting Standards ("IFRS") as
adopted by the European Union. Certain information and note
disclosures normally included in annual financial statements
prepared in accordance with IFRS, as adopted by the EU, have been
omitted or condensed as is normal practice for interim reporting
periods. The condensed Group interim financial statements are
unaudited, and do not constitute statutory accounts as defined in
sections 435(1) and (2) of the Companies Act 2006. Statutory
accounts for the year ended 31 December 2014 are published on the
Group's website, www.afren.com. The report of the auditor on those
accounts was unqualified, however it included an emphasis of matter
regarding a material uncertainty in respect of going concern. The
report of the auditor did not contain any statement under sections
498(2) or (3) of the Companies Act 2006.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Operations review of the Annual Report for the
year ended 31 December 2014, which is available at www.afren.com.
The financial position of the Group at the period end, its cash
flows, liquidity position and net debt are described in the
Financial review.
Events following the dismissal of the Group's former CEO and COO
have placed significant pressure on the Group's liquidity position,
resulting in the Group having net current liabilities of US$1,068
million as at 31 March 2015.
The Company's inability to execute the planned refinancing in
the middle of 2014, followed by the sharp decline in market oil
prices, led the Directors to initiate an urgent review of the
Group's capital structure, liquidity and funding requirements as
announced on 20 January 2015. On 30 January 2015, the Group
announced it had obtained from the lenders of the US$300 million
Ebok debt facility a deferral of the US$50 million amortisation
payment due on 31 January 2015. On 4 March 2015, the Group
announced that the Board had decided at the expiration of a 30 day
grace period not to pay US$15 million of interest which was due on
1 February 2015 under its 2016 Senior Notes.
On 13 March 2015, the Group announced a preliminary agreement
for the receipt of Interim Funding and the Recapitalisation of the
business. The agreement entered into by Afren together with certain
noteholders under its 2016 Notes, 2019 Notes and 2020 Notes
(Noteholders) and a majority of the lenders under the Group's
existing US$300 million Ebok credit facility, wasintended to result
in the provision of US$255-US$305 million of net total funding
before the end of July 2015. On 30 April 2015, the Company entered
into definitive agreements with certain Noteholders and issued
US$212 million of private placement notes (PPN), providing US$200
million in net cash to the Group. In conjunction with such
agreement, the lenders under the Group's existing US$300 million
Ebok credit facility agreed to the deferral of the US$50 million
amortisation payments due on 31 January 2015 and 30 April 2015
until the completion of the implementation of the Recapitalisation
(at which point it is expected that the amortisation payments will
be further deferred until after the repayment of the New High Yield
Notes - see below).
In connection with the Recapitalisation, on 30 April 2015 the
Group also entered into a conditional agreement to raise US$55
million in additional net proceeds (after the repayment of the PPN)
from the issuance of new High Yield Notes due in 2017 (New HY
Notes). On 29 May 2015 the Group announced that the Noteholders
have agreed to subscribe for further New HY Notes up to the maximum
level permitted of US$369 million increasing the additional net
cash proceeds by a further $93 million. In addition, as part of the
Recapitalisation (i) 25% of the 2016 Notes, 2019 Notes and 2020
Notes (Existing Notes) will be converted to new equity in the
Company; (ii) the remaining 75% of the Existing Notes will be
extended to mature as to US$350 million in each of December 2019
and December 2020; (iii) the existing Ebok credit facility will be
extended to 2019; (iv) new shares will be issued to subscribers to
the New HY Notes and the PPN; and (v) the Company will undertake an
equity offering of up to US$75 million to shareholders. The Group
has also reached agreement with the lender of its Okwok/OML 113
facility to restructure and defer this facility until 2018.
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