(Reuters) - Premier Oil Plc (L:PMO) said on Tuesday it was in talks with private-equity backed oil producer Chrysaor and several other parties on alternative deals to secure long-term debt refinancing.
Premier said last month it was seeking $530 million (£411 million) in fresh equity, of which existing creditors said they would underwrite $205 million in a potential debt-for-equity swap.
The company, with market capitalisation of around 162 million pounds on Tuesday and net debt of just under $2 billion, needs at least $325 million in new equity for its creditors to extend current maturities.
Premier said it was discussing alternative means of refinancing in the best interests of its stakeholders, but that there was no certainty of an agreement.
The Chrysaor talks have not touched on the possibility of Chrysaor acquiring Premier, according to banking sources close to the process.
The two sides have focused on a solution that would involved a debt-for-equity swap aimed at reducing Premier's debt, the sources said, without giving further details.
"To date, terms of the transactions discussed do not, in Premier's opinion, provide better outcomes for either its shareholders or creditors than those proposed under the heads of terms announced on 20 August 2020," the company said.
Sources said Premier and its bond holders had sought a new cornerstone investor or prepaid sales deal before the August announcement, but sealed no agreement.
Premier declined to comment beyond its statement.
Another potential source of cash, the possible sale of its stake in the Mexican Zama field, stalled earlier this year.
Around $230 million of any fresh cash is earmarked to buy North Sea oil fields from BP (L:BP) which will help push up Premier's output to 100,000 barrel of oil equivalent per day from currently around 67,000 boe/d.
That portion of the raise has received a positive shareholder response, sources with knowledge of the matter said.
Premier has appointed investment bank RBC for the process, the sources added.
Premier's creditors, via financial advisor Lazard, tried to attract investment from at least one private equity firm but reached no deal, two sources with knowledge of the matter said.
At the same time it held talks, including with trading houses such as Vitol, for a loan in exchange for crude oil or a stake in the company, two other sources said.
In June, Premier reached an agreement with activist investor ARCM which involved ARCM buying new equity at a discount of around 9.6% to the volume-weighted average price over the previous five days.
Premier generates cash once the oil price is above $37 a barrel. It needs to get at least 75% of its creditors on board, up from a current level of 45%, to proceed with its plans.