EnQuest raises £82m in financial restructure

EnQuest announced the launch of a proposed issuance of equity on Thursday, by way of a placing and open offer of 356,738,114 new ordinary shares.

The London-listed firm confirmed the issue price as 23p per share, and expected to raise proceeds of approximately £82m, or £78.1m net of estimated expenses.

It said the placing and open offer is part of a proposed financial restructuring of the group, which the board has agreed with its key stakeholders following an “extensive period” of engagement and negotiation.

The board said it believes that, if successful, the restructuring will provide the group with a stable and sustainable capital structure, reduced cash debt service obligations and greater liquidity.

“These will all contribute to the continued delivery by the group of its strategic objectives,” EnQuest’s statement read.

The proceeds of the placing and open offer will be used to continue the development of the company's Kraken asset with the aim of achieving first oil in the first half of 2017.

It will also be used to continue the development of the Scolty/Crathes asset, and provide general corporate and working capital.

EnQuest said it does not intend to use any proceeds from the placing and open offer to repay bank debt.

“We are very pleased to announce today a comprehensive package of measures to place EnQuest on a strong footing to deliver our Kraken development in H1 2017 and ensure that we are well placed to deliver value to our shareholders in the medium term,” said chairman Jock Lennox.

“Over the last two years, EnQuest has taken action to implement extensive cost saving programmes to refocus the business for the low oil price environment, including reducing and re-phasing both capital and operating expenditures.

“Simultaneously, EnQuest has been working on a range of other funding and liquidity options, which culminate in the restructuring announced today.”

Lennox said the company has agreed a range of improvements on the terms of its debt facilities, and has also reached agreement with 61% of its high yield noteholders on proposed note amendments.

“The proposed restructuring, which encompasses amendments to EnQuest's existing RCF facility, amendments to the high yield notes and the retail notes, the renewal of the company's surety bond facilities and the placing and open offer, will significantly improve the liquidity position of the company so that EnQuest can deliver first oil from the Kraken development in H1 2017 in accordance with management's projections,” Lennox explained.

“The Kraken development continues to be on track with the FPSO set for sail away in H2 2016.”