TIDMGKP
RNS Number : 1605E
Gulf Keystone Petroleum Ltd.
14 July 2016
Not for release, publication or distribution, directly or
indirectly, in whole or in part in or into the United States or any
jurisdiction other than the United Kingdom and Bermuda where to do
so would constitute a contravention of the relevant laws or
regulations of such jurisdiction. This announcement (and the
information contained herein) does not contain or constitute an
offer to sell or the solicitation of an offer to purchase, nor
shall there be any sale of securities in any jurisdiction where
such offer, solicitation or sale would constitute a contravention
of the relevant laws or regulations of such jurisdiction.
14 July 2016
Gulf Keystone Petroleum Ltd. (LSE: GKP)
("Gulf Keystone", "GKP", or "the Company")
US$250,000,000 13.0 per cent. Guaranteed Notes due 2017 (ISINs:
Regulation S XS1056559245, Rule 144A XS1056559088) (the "Guaranteed
Notes") and US$325,000,000 6.25 per cent. Convertible Bonds due
2017 (ISIN: XS0841237497, Common Code: 084123749) (the "Convertible
Bonds")
Balance Sheet Restructuring Transaction
Unless the context otherwise requires, capitalised terms in this
announcement shall have the meaning set out in the appendix
hereto.
Gulf Keystone has reached agreement with a majority of its
creditors, including holders of approximately 66% of the aggregate
principal amount of the Guaranteed Notes and approximately 50% of
the aggregate principal amount of the Convertible Bonds, as well as
its largest Shareholders, Capital Research and Management Company,
as investment advisor to New World Fund, Inc. and SMALLCAP World
Fund, Inc. ("Capital"), to address its short and longer term
funding needs via a capital restructuring and open offer (the
"Restructuring").
Gulf Keystone's Guaranteed Notes and Convertible Bonds mature in
April 2017 and October 2017, respectively. The Company's ability to
service, refinance and/or repay those instruments has been severely
impaired by the current low oil price environment and adverse
geopolitical developments. The Directors, supported by their
advisors, pursued multiple options to address these issues. The end
result of this process is that the Board has concluded that the
only prospect for the Company to continue trading and avoid a
liquidation is to effect a substantial restructuring of the
Company's balance sheet and that the Restructuring (as presented in
this announcement) is in the best interest of the Company and its
stakeholders.
Key highlights
-- Debt reduction: Implementation of a new capital structure
intended to strengthen the Company's balance sheet with a
significant debt reduction from over US$600 million to US$100
million through the conversion of over US$500 million of existing
debt into equity of the Company by way of a UK scheme of
arrangement among the Company, the Guaranteed Noteholders and the
Convertible Bondholders
-- Improved liquidity: With an equity raise of US$20-25 million
through the Open Offer, a reduction of financing costs and the
removal of the US$32.5 million Debt Service Reserve Account
covenant. This increase in liquidity is designed to allow the
Company to continue trading and developing the Shaikan field to
unlock its potential as one of the most significant assets in
Kurdistan. It is expected to allow the implementation of the
Company's near-term investment plan to maintain production at
40,000 barrels of oil per day ("bopd") with the potential to
increase production to 55,000 bopd
-- Shareholder dilution and re-investment option: Following the
Debt Equitisation of over US$500 million and not including
Shareholders' rights to subscribe in the Open Offer, Shareholders'
ownership of the Company will be diluted to 5%; however,
Shareholders will have the ability to re-invest in a
well-capitalised Company by participating in the US$25 million Open
Offer for 10% of GKP's equity at closing of the Restructuring
-- To the extent the US$25 million is not fully subscribed by
Shareholders, Capital has agreed to subscribe for up to US$20
million of New Common Shares
-- Pro forma capitalisation: Upon completion of the
Restructuring and assuming the Open Offer is fully subscribed,
Guaranteed Noteholders will retain US$100 million of Reinstated
Notes and will receive New Common Shares representing 65.5% of the
equity of GKP post-closing, and Convertible Bondholders will
receive New Common Shares representing 20.0% of the equity of GKP
post-closing. Assuming the Open Offer is fully subscribed,
Shareholders will own up to 14.5% of the equity of GKP
post-closing
-- Board recommendation: The Board of GKP has focused on
protecting the value of the Company, its ability to continue its
operations as a going concern and the interests of all of GKP's
stakeholders during the negotiation process. The Board believes the
Restructuring offers the best possible outcome for all. If the
Restructuring is not implemented, the alternatives available to the
Board are likely to lead to zero value for the Shareholders and the
non-consenting Convertible Bondholders
Commenting on today's announcement, Andrew Simon, Chairman
said:
"Our Shareholders, and those of the other Kurdistan focused
operators, have suffered significant value destruction over recent
months, as a result of the low oil price and extraordinary regional
geo-politics. For us this has been further compounded by a debt
burden of over US$600 million repayable next year. To address the
liquidity and significant leverage situation faced by the Company,
we have to restructure the balance sheet now.
A new and strengthened management team and Board have been
working tirelessly for the benefit of all stakeholders, to ensure
GKP's survival. Following months of negotiation, and in the absence
of deliverable alternatives, the Board believes the proposed
restructuring offers the best possible outcome for all."
Jón Ferrier, CEO, said:
"Without the restructuring and the improved liquidity delivered
by the transaction, the Company cannot avoid insolvency or capture
the significant future potential of the Shaikan field.
In my view this is the best possible transaction for existing
stakeholders in these very challenging circumstances, and I urge
stakeholders to support it. For the Shareholders who are able, the
opportunity exists to partly offset the dilution of the necessary
debt equitisation and capture any future increase in equity value
by participating in the open offer. We acknowledge the cooperation
of our significant Guaranteed Noteholders and Convertible
Bondholders, and are grateful for the continued support of our
current largest Shareholders, Capital.
With the support of the MNR, which has established a pattern of
payments, and with a stabilising oil price environment and
sustainable debt levels, we have the foundations of a strong future
equity story for a restructured GKP to develop the Shaikan field
and unlock its potential as one of the most significant assets in
Kurdistan.
Without a successful consensual restructuring, Shareholders and
Convertible Bondholders have no realistic chance of preserving
current value or participating in future value."
Key Terms of the Restructuring
The Restructuring will involve the Debt Equitisation of over
US$500 million of the Company's current indebtedness (including
accrued interest thereon) and an equity capital increase of between
US$20 million and US$25 million. The Restructuring will be
implemented via the Scheme which will effect the Debt Equitisation
and the Notes Reinstatement, and will be conditional on, inter
alia, the approval by Shareholders of the Resolution at the Special
General Meeting which will authorise the increase to the Company's
authorised share capital to permit the issuance of New Common
Shares in connection with the Open Offer and Subscription, and the
Debt Equitisation.
The principal components of the Restructuring comprise:
Debt Equitisation and Notes Reinstatement
-- The reduction of Gulf Keystone's indebtedness through the
full equitisation of the Convertible Bonds (including accrued
interest thereon), and partial equitisation of the Guaranteed Notes
(including accrued interest thereon) down to US$100 million
pursuant to the Scheme;
-- Guaranteed Noteholders will have the option to elect to (i)
reinstate all or part of their claims with respect to the
Guaranteed Notes into US$100 million aggregate principal amount of
Reinstated Notes; and/or (ii) convert all or part of their claims
into equity. In the event election for Reinstated Notes exceeds
US$100 million, the amount elected by Guaranteed Noteholders will
be scaled back pro rata so that the principal amount of the
Reinstated Notes will be limited to US$100 million. In the event
election for Reinstated Notes is less than US$100 million, the
Guaranteed Noteholders subject to Debt Equitisation will be
allocated Reinstated Notes on a pro rata basis to make up the
shortfall; and
-- The Reinstated Notes will be guaranteed by GKPI and their
terms will be the same as the existing Guaranteed Notes, subject to
the following amendments:
o Maturity: 18 October 2021. At any time prior to maturity, the
Reinstated Notes are redeemable at par and can therefore be
refinanced without any prepayment penalty;
o Interest: from the date of issuance to 18 October 2018, the
Company will have the option to pay interest either (a) on a PIK
basis at 13% or (b) in cash at 10%. From 19 October 2018 onwards,
interest will be payable in cash at 10%;
o The Company will be permitted to raise up to US$25 million of
additional indebtedness at any time on market terms to fund capital
expenditure and operating expenses post-Restructuring. This
additional indebtedness may be incurred as (i) a tap issuance of
the Reinstated Notes, or (ii) super senior credit facility
indebtedness ranking ahead of the Reinstated Notes; and
o Certain other amendments including, inter alia, the removal of
security, the removal of the Debt Service Reserve Account and the
extension of the grace periods in respect of certain events of
default under the Reinstated Notes.
US$25 million Equity Raise
The Company is undertaking the Open Offer in order to, inter
alia, support the Company's previously announced near-term
investment plan to maintain production at 40,000 bopd with the
potential to increase production to 55,000 bopd subject to MNR and
MOL approvals, the continuation of the regular payment cycle from
the MNR and a commercially acceptable investment environment, and
to provide Qualifying Shareholders with the opportunity to
participate further in any potential upside arising from any
increase in oil prices and the further development of Shaikan. The
Open Offer will include the following terms. In summary:
-- The Company will make the Open Offer realising up to US$25
million through the issue of the Open Offer Shares equivalent (if
fully subscribed) to 10.0% of the pro forma equity of the Company
post-Restructuring.
-- To the extent the Open Offer is not fully subscribed, the
Company's current largest Shareholders Capital have agreed to
subscribe for up to US$20 million of New Common Shares at the Offer
Price. If subscriptions from other Shareholders under the Open
Offer exceed US$5 million then the amount to be subscribed for by
Capital will reduce dollar for dollar by the amount of the excess
so that the full US$25 million is available to Shareholders other
than Capital. Capital have undertaken to vote in favour of the
Resolution at the Special General Meeting its entire interest
(representing 12.0% of the Company's issued share capital,
including shares from the Initial Subscription).
-- The Open Offer Shares will be issued at the Open Offer Price
of 1.09 dollar cents (0.82 pence - GBP/USD FX rate of 1.3221 as of
13 July 2016) and Shareholders will be entitled 20 new Common
Shares for every 9 existing Common Shares held.
-- The Open Offer will provide an opportunity for all Qualifying
Shareholders to participate in the fundraising by both subscribing
for their respective Open Offer Entitlements and by subscribing for
Excess Shares under the Excess Application Facility, subject to
availability.
Pro forma Shareholding
The following table shows the pro forma equity share capital of
the Company post Restructuring both including the Open Offer
(assuming it is fully subscribed) and excluding the Open Offer,
including the equity allocation to Guaranteed Noteholders and
Convertible Bondholders and the dilutive effect for
Shareholders:
Post-Debt Equitisation Post-Debt Equitisation
/ Excluding Open and US$25 million
Offer Open Offer Fully
Subscribed
------------------------ ---------------------- ----------------------
Guaranteed Noteholders 72.8% 65.5%
------------------------ ---------------------- ----------------------
Convertible Bondholders 22.2% 20.0%
------------------------ ---------------------- ----------------------
Existing Shareholders
Pre-Restructuring
Equity 5.0% 4.5%
------------------------ ---------------------- ----------------------
Existing Shareholders
subscribing to the
Open Offer 10.0%
------------------------ ---------------------- ----------------------
Total Post-Open
Offer 100.0%
------------------------ ---------------------- ----------------------
Subject to certain exceptions, the Open Offer will not be made
to any person with a registered address, or who is located or
resident, in the United States, any Excluded Territory or any other
jurisdiction where to do so could constitute a violation of the
relevant laws of such jurisdiction.
Conditionality of the Restructuring
The conditions of the Restructuring, which may be waived by the
Majority Participating Holders, will include the following:
a) the Scheme having become effective in accordance with its
terms - the Debt Equitisation and the Notes Reinstatement under the
Scheme will require the approval of Guaranteed Noteholders and
Convertible Bondholders at the meetings to be convened in
connection with the Scheme, and the Scheme must be sanctioned by
the relevant court. The Scheme will require the consent of not less
than 75% (by value), and a majority in number, of each of the
Guaranteed Noteholders and Convertible Bondholders that attend and
vote at each of the Creditor Meetings;
b) satisfaction that the New Common Shares issued in the Debt
Equitisation will be admitted to trading on the London Stock
Exchange;
c) approval of the Resolution, which is necessary to effect an
increase of the Company's share capital and therefore consummate
the Debt Equitisation, Open Offer and Subscription;
d) no material changes to the Company's near-term investment
plans or material spending in excess of production maintenance
until the implementation of the Restructuring; and
e) the Company agreeing arrangements with the MNR reasonably
satisfactory to both it and to the Majority Participating Holders
regarding (a) the agreed changes to the Shaikan PSC pursuant to the
Second Shaikan Amendment, (b) the marketing of its oil and (c) the
predictability of future payments including recovery of past costs
and receivables.
Initial Subscription
-- The Company announces the subscription by Capital for a total
of 54,294,991 Common Shares at the Open Offer price of 1.09 dollar
cents per Common Share. The Initial Subscription Shares represent,
in aggregate, approximately 5.6% of the Company's current issued
share capital pre-completion of the Initial Subscription.
Special General Meeting
-- Shareholders will be required to approve the Resolution at
the Special General Meeting. Approval of the Resolution will permit
the issuance of New Common Shares under the Open Offer and the Debt
Equitisation.
-- The Resolution will require approval by a simple majority of
votes cast at the Special General Meeting by Shareholders voting in
person or by proxy, with one vote per Common Share.
-- Capital, who, as at the date of this announcement, hold
Common Shares representing 12% of the Company's issued share
capital, have entered into the Irrevocable Undertaking to vote in
favour of the Resolution at the Special General Meeting.
Failure to Receive Support from a Stakeholder Group
The Restructuring is conditional, inter alia, on the support
from Guaranteed Noteholders, Convertible Bondholders and
Shareholders. Failure to receive the required support from one or
more of those constituencies would mean that the Restructuring will
not proceed and the Company will not be able to raise capital
through the Open Offer. In these circumstances, in view of the
Company's financial position, the Company would need to focus on
maximising recoveries for its creditors and preserving the business
and operations of Gulf Keystone, and the Company has agreed to work
with the Committee to seek to effect a transfer of the Company's
business and operations to the Guaranteed Noteholders, and also
those Convertible Bondholders who have entered into the
Restructuring Agreement by 1 August 2016. In such event,
Shareholders, and those Convertible Bondholders who have not
entered into the Restructuring Agreement by 1 August 2016, are
expected to receive nil consideration or recovery with respect to
their current investment in the Company.
Recommendation to Shareholders - Shareholders should vote in
favour of the Resolution at the Special General Meeting
In the opinion of the Directors, voting in favour of the
Resolution to authorise the increase in the Company's share capital
to facilitate the Restructuring will:
-- provide Shareholders with an opportunity to participate in
the Open Offer to increase their ownership position and participate
in the future growth of the Company;
-- improve the capital structure of the Company to provide it
with the resources to implement its announced investment plan to
maintain and grow Shaikan production; and
-- prevent a formal insolvency filing, potentially leading to
nil value for the Shareholders and the non-consenting Convertible
Bondholders.
If Shareholders do not approve the Resolution at the Special
General Meeting, it is highly likely that there will be no value
returned to Shareholders.
Upon a No vote:
-- the Restructuring will not proceed and the Company will not
be able to raise capital through the Open Offer;
-- the Company will face the prospect of insolvency because it
will not be able to refinance the Guaranteed Notes or Convertible
Bonds when they fall due for repayment next year or earlier if they
accelerated by reason of the ongoing default described below;
-- the Company will be in continuing default under the
Guaranteed Notes and the Convertible Bonds. In the light of the
need to substantially restructure the Company's balance sheet, the
Company determined it was not in the best interest of the Company
for it to make payment of the most recent interest coupon on its
Guaranteed Notes and Convertible Bonds due in April 2016. That
default has not been cured or waived. If the Restructuring were not
to proceed, for any reason, including because Shareholders do not
approve the Resolution, then the Company's expectation, is that,
given the prospect of insolvency, it would not be in the best
interest of the creditors for the Company to cure the default by
paying the coupon. Payment would provide no significant protection
as the next coupon falls due on 18 October and the Company does not
anticipate that it will have sufficient cash to cure the April
coupon payments and to make the October payments without being in
breach of the debt service reserve covenant. Further, using cash to
make these payments would diminish the prospects of the Company
being able to successfully conclude a balance sheet restructuring
in the future.
-- The Company may become subject to enforcement action or
insolvency before the maturity of the Guaranteed Notes and the
Convertible Bonds. The existence of the continuing payment default
exposes the Company to the ongoing risk of acceleration and/or
enforcement. Under the Restructuring Agreement the signatories have
agreed to forbear from taking any action to enforce the Guaranteed
Notes and/or the Convertible Bonds in respect of that default.
However, if the Resolution is not approved then enforcement steps
could be taken either as part of the Alternative Restructuring or
following the termination of the Restructuring Agreement. Holders
of not less than one-quarter of the principal amount of each of the
Convertible Bonds and the Guaranteed Notes can request that the
relevant trustee declares that the Convertible Bonds and/or the
Guaranteed Notes, as applicable, are immediately due and repayable
at their principal amount together with accrued interest;
-- in light of the prospect of insolvency, the Company would
have to prioritise the interests of its creditors and, in
particular, seek to minimise their losses, and this would take
precedence over the interests of Shareholders. In an insolvency of
the Company, existence of the guarantee from GKPI that supports the
Guaranteed Notes would entitle Guaranteed Noteholders to look to
GKPI and its assets, which represent most of the economic value of
the Group, for recovery of their claims.
-- Accordingly, the Company has concluded that, if the
Restructuring fails, in order to preserve the business and
operations of Gulf Keystone, the Company would seek to implement an
alternative restructuring transaction which would be preferable for
its creditors to a liquidation.
-- In order to achieve this, under the Restructuring Agreement,
if the Shareholders do not approve the Resolution, the Company has
agreed to work with the Committee to seek to effect an alternative
restructuring of the Company's balance sheet capital structure.
This alternative would involve the transfer of the Company's
business and operations to the Guaranteed Noteholders, and also
those Convertible Bondholders who have entered into the
Restructuring Agreement by 1 August 2016. In such event,
Shareholders, and those Convertible Bondholders who have not
entered into the Restructuring Agreement by 1 August 2016, are
likely to receive nil consideration or recovery with respect to
their current investment in the Company. If the Company were not to
cooperate in such an alternative restructuring, then it would
remain open for the Guaranteed Noteholders to seek to effectively
implement such a transaction regardless and without the
co-operation of the Company but potentially with a worse outcome
for creditors;
-- in such an alternative restructuring, Shareholders are very
unlikely to have the opportunity to invest in the Company and
participate in any potential upside; and
-- if an alternative restructuring cannot be implemented for any
reason, then it is highly likely that the Group would become
subject to an insolvency process with a material and adverse impact
on its position as operator of the Shaikan block. The Company has
been advised that the distributions arising from insolvency may not
be sufficient to repay its creditors in full, and therefore in that
event there would be no return to Shareholders.
In these circumstances, the Directors consider that if
Shareholders do not vote in favour of the Resolution, GKP's future
would entirely depend upon the position and action of its
creditors. The Shareholders would be unlikely to receive any
proceeds from the sale of the Group or the disposal of the
Company's assets or any other return of income or capital by the
Company, and therefore the Shareholders would be unlikely to see
any return of their current investment.
If any of the other conditions to the Restructuring are not
satisfied, including in particular the approval of the Scheme at
the meetings of Guaranteed Noteholders and Convertible Bondholders
then the same consequences to the Company, Shareholders, Guaranteed
Noteholders and Convertible Bondholders outlined above would
apply.
In the Board's opinion, the Restructuring is the best
transaction possible for the Company and the Shareholders.
Accordingly, the Board unanimously and strongly recommends
Shareholders vote in favour of the Resolution to be proposed at the
Special General Meeting.
Background to the Restructuring
Gulf Keystone's Guaranteed Notes mature in April 2017, and the
Convertible Bonds mature in October 2017. The Company's ability to
service, repay and/or refinance those instruments on or before
maturity has been severely and adversely affected by the general
disruption in the oil and gas markets arising from the significant
decline in oil prices in the second half of 2014 and during 2015
and the continued adverse effects of the geopolitics in the region.
The Company's financial performance has also been negatively
impacted by the historic lack of a regular payment cycle for crude
oil export sales and disruption to supply. The liquidity available
to the Company to finance continuing operations has been tight and
there is limited ability to fund the capital expenditure necessary
to implement the Company's development plans or to ensure
maintenance of current production levels over the medium term.
Furthermore, even under a scenario of significantly higher oil
prices and recovery of all arrears from the MNR, the Company does
not expect to be able to refinance or repay its current financial
indebtedness of US$601 million due in 2017.
To address these difficulties, the Board instructed its advisors
to explore all potential options. This included engaging in an
M&A process. In the M&A process, 18 parties have been in
discussions about potential transactions ranging from farm-ins to
corporate sale options with the Company. Although several
non-binding proposals were received, none of these has progressed
to a formal proposal as a result of the unfavourable regional
geopolitical climate and ongoing oil price uncertainties that have
affected M&A activity in the oil & gas industry
globally.
In addition to the M&A process, the Company engaged in
discussions with potential strategic equity investors to seek
funding, including those with existing exposure to Kurdistan, as
well as exploring capital markets options. However, none of these
alternatives have resulted in a successful solution for GKP.
In parallel with the exploration of strategic options, the
Company has held extensive discussions with the MNR to improve the
terms of the Shaikan PSC and resolve the legacy contractual issues
which resulted in the bilateral MNR Agreement. Based on the
bilateral MNR Agreement, GKP's capacity building bonus was reduced
from 40% to 30% and a schedule for near term repayment of the 20%
interest back-costs due to GKP via continued monthly top-up
payments was established. The Company continues to work with the
MNR and MOL, its partner under the Shaikan PSC, to implement this
agreement in the form of the Second Shaikan Amendment.
In absence of deliverable M&A or equity fundraising options,
the Company, having taken advice, concluded that it needs to put in
place a sustainable and appropriate capital structure which will
enable it to implement its business strategy and provide sufficient
liquidity and funding for its operations and capital expenditure
plans for the medium term. The Board has concluded that the
Restructuring is the best route to ensure that the Company has a
viable future and to create value for all stakeholders.
Restructuring Agreement and Lock-up
GKP, GKPI, Guaranteed Noteholders representing approximately 66%
of the Guaranteed Notes and Convertible Bondholders representing
approximately 50% of the Convertible Bonds have entered into the
Restructuring Agreement. Under the terms of the Restructuring
Agreement, the signatories have agreed, inter alia, to (i) forbear
from taking any action to enforce the terms of the Guaranteed Notes
and/or the Convertible Bonds, as applicable, (ii) support and take
reasonable and necessary actions (that are consistent with the
Restructuring Agreement and the Restructuring) as they may have
under or in respect of the Guaranteed Notes and/or the Convertible
Bonds, as applicable, in furtherance of implementation and
consummation of the Restructuring and (iii) vote in favour of the
Scheme at the relevant Creditor Meeting(s).
The Restructuring Agreement will terminate on 14 October 2016,
provided that it may be extended in certain circumstances to a date
not later than 15 December 2016 and may also be terminated by the
Company and/or the Majority Participating Holders in certain other
circumstances.
Any existing Guaranteed Noteholder or Convertible Bondholder
that wishes to accede to the Restructuring Agreement is encouraged
to contact:
D.F. King Limited, the Information Agent (whose details are set
forth at the end of this announcement) as soon as possible but in
any event not later than close of business on 1 August 2016 in
order to be eligible to participate in an alternative restructuring
transaction.
Further Information
Further information about the Restructuring can be found at
www.gulfkeystone.com/restructuring.
Financial and legal advisors
Perella Weinberg Partners UK LLP acts as the Company's financial
advisor; Paul Hastings (Europe) LLP acts as its legal advisor in
connection with the Restructuring; Memery Crystal LLP acts as its
legal advisors in connection with the Open Offer; and DF King
Limited acts as Information Agent.
Enquiries
Gulf Keystone Petroleum: +44 (0) 20 7514 1400
Jón Ferrier, CEO
Sami Zouari, CFO
Anastasia Vvedenskaya, Head of Investor
Relations +44 (0) 20 7514 1411
Celicourt Communications: +44 (0) 20 7520 9266
Mark Antelme
Jimmy Lea
DF King Limited acts as Information Agent for Guaranteed Noteholders
and Convertible Bondholders. Guaranteed Noteholders and Convertible
Bondholders with questions regarding obtaining or completing
the Lock-Up and Support Agreement should contact:
Information Agent
D.F. King Limited
gkp@dfkingltd.com
https://sites.dfkingltd.com/gkp +44 (0) 20 7920 9700
Notes to Editors:
-- Gulf Keystone Petroleum Ltd. (LSE: GKP) is a leading
independent operator and producer in the Kurdistan Region of Iraq
and the operator of the Shaikan field with current production
capacity of 40,000 barrels of oil per day
-- Further information on Gulf Keystone is available on its website www.gulfkeystone.com
Disclaimer
This announcement contains certain forward-looking statements.
These statements are made by the Company's Directors in good faith
based on the information available to them up to the time of their
approval of this announcement but such statements should be treated
with caution due to inherent uncertainties, including both economic
and business factors, underlying such forward-looking information.
This announcement has been prepared solely to provide additional
information to shareholders to assess the Group's strategies and
the potential for those strategies to succeed. This announcement
should not be relied on by any other party or for any other
purpose.
This communication and the information contained herein is not
an offer of securities for sale in the United States or the
Excluded Territories or any other jurisdiction where to do so could
constitute a violation of the relevant laws of such jurisdiction.
Securities may not be offered or sold in the United States unless
they are registered under the U.S. Securities Act of 1933, as
amended, or are exempt from registration thereunder. Any public
offering of securities to be made in the United States would be
made by means of a prospectus that would contain detailed
information about the Company and its management, as well as
financial statements. The Company does not intend to register any
of its securities in the United States or to conduct a public
offering in the United States or any other jurisdiction. Copies of
this communication are not being, and should not be, distributed in
or sent into the United States.
This communication is directed only at (i) persons who are
outside the United Kingdom or (ii) persons who have professional
experience in matters relating to investments falling within
Article 19(2) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005, as amended from time to time (the
Order) or (iii) high net worth entities, and other persons to whom
it may lawfully be communicated, falling within Article 49(2) of
the Order or (iv) certified high net worth individuals and
certified and self-certified sophisticated investors as described
in Articles 48, 50, and 50A respectively of the Order or (v)
persons to whom this communication may otherwise be lawfully
communicated (all such persons together being referred to as
relevant persons). Any investment activity to which this
communication relates will only be available to and will only be
engaged with, relevant persons. Any person who is not a relevant
person should not act or rely on this document or any of its
contents.
This communication is distributed in any member state of the
European Economic Area which applies Directive 2003/71/EC (this
Directive together with any implementing measures in any member
state, the Prospectus Directive) only to those persons who are
qualified investors for the purposes of the Prospectus Directive in
such member state, and such other persons as this document may be
addressed on legal grounds, and no person that is not a relevant
person or qualified investor may act or rely on this document or
any of its contents.
Perella Weinberg Partners UK LLP ("Perella Weinberg Partners"),
which is authorised and regulated in the United Kingdom by the
Financial Conduct Authority, is acting as financial adviser to the
Company and no one else in relation to the Restructuring and the
arrangements referred to in this announcement. Perella Weinberg
Partners will not regard any other person (whether or not a
recipient of this announcement) as its client in relation to the
Restructuring and will not be responsible to anyone other than the
Company for providing the protections afforded to clients of
Perella Weinberg Partners or for providing any advice in relation
to the Restructuring, the contents of this announcement or any
transaction or arrangement referred to herein. No liability
whatsoever is accepted by Perella Weinberg Partners for the
accuracy of any information contained in this announcement or for
the omission of any material information, for which it is not
responsible.
DEFINITIONS
The following definitions apply throughout this Circular, unless
the context requires otherwise:
Board the directors of the Company from
time to time
Capital Capital Research and Management
Company, which serves as investment
advisor to New World Fund, Inc.
and SMALLCAP World Fund, Inc.
Common Shares common shares in the capital of
the Company, with a nominal par
value of US$0.01
Committee the ad-hoc committee of Guaranteed
Noteholders and Convertible Bondholders
formed in October 2015
Company or GKP or Gulf Gulf Keystone Petroleum Limited
Keystone
Convertible Bondholders the holders of the Convertible
Bonds
Convertible Bonds the US$325 million of convertible
bonds due 2017 issued by the Company
Creditor Meetings the meetings of the Scheme Creditors
convened in accordance with the
Scheme to consider and, if thought
fit, approve the Notes Reinstatement
and the Debt Equitisation, including
any adjournment thereof
Debt Equitisation the release and conversion into
equity of 62.4% of the outstanding
principal amount and accrued interest
of the Guaranteed Notes (being
approximately US$266 million) and
100.0% of the outstanding principal
amount and accrued interest of
the Convertible Bonds (being approximately
US$335 million) pursuant to the
issue of New Common Shares to Guaranteed
Noteholders and Convertible Bondholders,
which will result in the Guaranteed
Noteholders and Convertible Bondholders
holding 72.8% and 22.2% (respectively)
of the increased share capital
of the Company immediately following
such conversion (assuming that
the Open Offer is subscribed in
full by all Qualifying Shareholders)
Debt Service Reserve Account the debt service reserve account
required under the terms and conditions
of the Guaranteed Notes
Directors the directors of the Company as
at the date of this announcement
Excess Application Facility the facility for Qualifying Shareholders
to apply for Excess Shares in excess
of their Open Offer Entitlements
Excess Shares Open Offer Shares which may be
applied for in addition to Open
Offer Entitlements
Excluded Territories Australia, Canada, Japan, New Zealand
and the Republic of South Africa
and each an "Excluded Territory"
GKPI Gulf Keystone International Petroleum,
GKP's wholly owned subsidiary and
party to the Shaikan PSC
Group the Company and its Subsidiaries
as at the date of this announcement
Guaranteed Noteholders the holders of Guaranteed Notes
Guaranteed Notes the US$250 million guaranteed notes
due 2017 issued by the Company
Initial Subscription the subscription by Capital on
13 July 2016 for the Initial Subscription
Shares at the Open Offer price
of 1.09 dollar cents per Common
Share
Initial Subscription Shares 54,294,991 Common Shares
Irrevocable Undertaking The irrevocable undertaking from
Capital to the Company entered
into in connection with the Subscription
Kurdistan the Kurdistan region, an autonomous
region in Iraq
Majority Participating Participating Holders holding in
Holders aggregate at least 50.01% of the
aggregated principal amount of
the Guaranteed Notes and the Convertible
Bonds held by the Participating
Holders at the relevant time
MNR Kurdistan's Ministry of Natural
Resources
MNR Agreement the bilateral agreement between
the Company and the MNR dated 16
March 2016
MOL MOL Hungarian Oil and Gas plc
New Common Shares the new Common Shares to be issued
in connection with the Restructuring,
being the Common Shares comprised
in the Debt Equitisation and the
Open Offer Shares
Notes Reinstatement the reinstatement of US$100 million
of Guaranteed Note claims to be
effected by the Scheme in connection
with the Restructuring
Offer Price 1.09 dollar cents (0.82 pence -
GBP/USD FX rate of 1.3221 as of
13 July 2016) per Open Offer Share
Official List the official list of the Financial
Conduct Authority
Open Offer the pre--emptive open offer to
all Qualifying Shareholders, comprising
up to US$25 million in New Common
Shares
Open Offer Entitlements the invitation by the Company to
Qualifying Shareholders to apply
to acquire Open Offer Shares based
upon their holding of Common Shares
held at the Offer Price
Open Offer Shares up to 2,294,295,672 New Common
Shares being offered by the Company
to Qualifying Shareholders pursuant
to the Open Offer
Participating Holders those Guaranteed Noteholders and
Convertible Bondholders from time
to time who have entered into or
otherwise become bound by the Restructuring
Agreement
Qualifying Shareholder shareholders(s) on the Register
on the relevant record date
Reinstated Notes the Guaranteed Notes as reinstated
pursuant to the Notes Reinstatement
Resolution the resolution to be proposed at
the Special General Meeting to
increase the authorised share capital
of the Company
Restructuring the capital restructuring of the
Company by way of the Open Offer,
the Debt Equitisation and the Notes
Reinstatement, as contemplated
by the Scheme, including (but not
limited to) any and all connected
compromises/agreements with persons
not party to the Scheme, the Debt
Equitisation, the Notes Reinstatement
or the Open Offer
Restructuring Agreement the conditional agreement between
the Company and each of the members
of the Committee entered into in
connection with the Restructuring
Scheme the scheme of arrangement under
Part 26 of the Companies Act 2006
between the Company and the Scheme
Creditors in connection with the
Restructuring with any modification,
addition or condition that the
UK court may think fit
Scheme Creditors the persons with a beneficial interest
as principal in the Guaranteed
Notes and/or Convertible Bonds
Second Shaikan Amendment the second proposed amendment to
the Shaikan PSC formally implementing
the terms of the MNR Agreement
(including the First Shaikan PSC
Amendment)
Shaikan block or Shaikan covers an area of 283 km(2) and
field is situated about 85 km to the
north-west of Erbil
Shaikan PSC the PSC for the Shaikan Block
Shareholder a holder of Common Shares from
time to time
Special General Meeting the general meeting of the Shareholders
or SGM at which the Resolution will be
proposed
Subscription the subscription by Capital for
up to US$20 million of New Common
Shares not taken up in the Open
Offer
Transaction Equity Value equity value implied by the Open
Offer of US$250 million for GKP
at closing of the Restructuring
UK or United Kingdom the United Kingdom of Great Britain
and Northern Ireland
UK Listing Authority or the Financial Conduct Authority
UKLA acting in its capacity as the competent
authority for the purposes of Part
VI of the FSMA and in the exercise
of its functions in respect of
admission to the Official List
US or United States the United States of America, its
territories and possession, any
state of the United States of America
and the District of Columbia
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCEASXLFSPKEEF
(END) Dow Jones Newswires
July 14, 2016 02:00 ET (06:00 GMT)
Gulf Keystone Petroleum (LSE:GKP)
Historical Stock Chart
From Mar 2024 to Apr 2024
Gulf Keystone Petroleum (LSE:GKP)
Historical Stock Chart
From Apr 2023 to Apr 2024