Seven Energy Defaults on Debt Interest Payment

• Seven Energy Defaults on Debt Interest Payment

Seven Energy International Limited has announced its inability to make the interest payment due on Wednesday on two notes issued by its wholly-owned subsidiary, Seven Energy Finance Limited.

Seven Energy International Limited, an integrated gas company in the South-East Nigeria, has been grappling with severe liquidity challenge in recent times.

The company, in an update on its capital restructuring, said it continued with “discussions with Savannah Petroleum Plc and the group’s lenders, including an ad hoc group of holders of the $300,000,000 10 ¼ per cent senior secured notes due 2021 (who are being advised by Moelis & Company and White & Case) and the $100,000,000 10 ½ per cent notes due 2021, as part of comprehensive capital restructuring of the group.

“In the meantime, the issuer (Seven Energy Finance Limited) will not make the interest payment, which becomes due under the SSNs and the 10 ½ per cent notes today (Wednesday).”

In April this year, Seven Energy announced that it had requested a standstill from its lenders under the $385m Accugas term facility dated June 23, 2015, and had not made payments of interest and principal due on March 31, 2017.

On April 11, the group failed to pay the interest due on the $300m, 10 ¼ per cent senior secured notes due 2021 and the $100m, 10 ½ per cent notes due 2021, and did not satisfy the conditions for the payment-in-kind interest.

“The 30-day grace period for payment of interest under the SSNs and the 10 ½ per cent notes expired on May 11, 2017, which represents an event of default under the terms of the SSNs and the 10 ½ per cent notes,” the group said.

Seven Energy said on May 15 that it was being advised by Ernst & Young and continued in constructive discussions with potential investors and lenders, with a view to achieving comprehensive capital restructuring.

“The group is in parallel discussions with all of its financial creditors, including an ad hoc group of holders of the SSNs, with a view to obtaining agreements to standstill on debt service obligations and waive any defaults arising under the various finance agreements,” it added.

It said its liquidity was severely affected by a range of external factors, including loss of material cash flow from its Strategic Alliance Agreement since February 2016 because of recurrent militant activity that resulted in the closure of Forcados export terminal, and a significant backlog of unpaid invoices relating to the supply of gas to federal and state-owned power stations.