REG - IOG PLC - Proposed short-term Bond amendments

IogAnnouncement

16/06/2023 17:00

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RNS Number : 0555D  IOG PLC  16 June 2023

16 June 2023

 

IOG plc

 

Proposed short-term Bond amendments

 

IOG plc ("IOG", or "the Company"), (AIM: IOG.L) provides a further update
following the RNS of earlier today regarding discussions with bondholders.

 

As stated, one of the Company's key objectives is to create a stable period to
address both near-term pressures and the longer-term bond maturity. In that
context, the Company has requested bondholders to consider certain short-term
amendments to the Bond, notably:

 

·     that the minimum Interest Cover Ratio requirement pursuant to
paragraph 13.20(c) of the Bond Terms with respect to the Relevant Period
ending on 30 June 2023 is waived;

·   as indicated earlier, that the payment date for the interest payment
due to be made on 20 June 2023 pursuant to paragraph 9.2 of the Bond Terms is
deferred from 20 June 2023 to 31 July 2023 (with those funds remaining in the
Debt Service Reserve Account);

·     that any event of default arising out of cross default from a
claimed event of default under the subordinated LOG convertible loan note is
waived until 31 July 2023.

 

A summons for a written resolution ("the Proposed Resolution") reflecting the
above is being issued to bondholders seeking approval of these amendments. The
Company has received voting undertakings of support to vote in favour of the
Proposed Resolution from bondholders controlling more than 50% of the Voting
Bonds.

 

Rupert Newall, CEO, commented:

 

"As noted earlier, we are engaging constructively with our bondholders to
ensure that the Company is best positioned to deliver value for its
stakeholders. That includes these proposed short-term amendments to the Bond,
for which I am pleased to say we already have voting undertakings in support
from bondholders controlling more than 50% of the voting bonds. As ever we
will keep the market updated on progress."

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the company's obligations under Article 17 of
MAR.

 

Enquiries:

 

 IOG plc                                            +44 (0) 20 7036 1400

 Rupert Newall (CEO)

 James Chance (Head of Capital Markets & ESG)

 finnCap Ltd                                        +44 (0) 20 7220 0500

 Christopher Raggett / Simon Hicks

 Peel Hunt LLP                                      +44 (0) 20 7418 8900

 Richard Crichton / David McKeown

 Vigo Consulting                                    +44 (0) 20 7390 0230

 Patrick d'Ancona / Finlay Thomson

About IOG:

 

IOG is a UK developer and producer of indigenous offshore gas. The Company
began producing gas in March 2022 via its offshore and onshore Saturn Banks
production infrastructure. In addition to its production assets, IOG operates
several UK Southern North Sea licences containing gas discoveries and
prospects which, subject to future investment decisions, may be commercialised
through the Saturn Banks infrastructure. All its assets are co-owned 50:50
with its joint venture partner CalEnergy Resources (UK) Limited. Further
details of its portfolio can be found at www.iog.co.uk (http://www.iog.co.uk)
.

 

 

Denne meldingen til obligasjonseierne er kun utarbeidet på engelsk. For
informasjon vennligst kontakt Nordic Trustee AS.

 To the bondholders of:

 ISIN: NO0010863236  Independent Oil and Gas plc. FRN senior secured EUR 130,000,000 bond 2019/2024

                     Oslo, 16 June 2023

 

Summons for a written resolution

Nordic Trustee AS (the "Bond Trustee") acts as bond trustee for the holders of
bonds (the "Bondholders") in the above mentioned bond issue with ISIN
NO0010863236 (the "Bonds") issued by IOG plc. (previously known as Independent
Oil and Gas plc.) as issuer (the "Issuer") pursuant to the bond terms made
between the Bond Trustee and the Issuer dated 19 September 2019 (the "Bond
Terms").

All capitalised terms used, but not defined, herein shall have the meaning
assigned to them in the Bond Terms, unless otherwise stated herein. References
to Clauses and paragraphs are references to Clauses and paragraphs in the Bond
Terms.

The Bond Trustee has issued this summons for a Written Resolution pursuant to
a request from the Issuer, in accordance with the Bond Terms.

The information in this summons (the "Summons") regarding the Issuer, market
conditions and described transactions is provided by the Issuer, and the Bond
Trustee expressly disclaims all liability whatsoever related to such
information. Bondholders are encouraged to read this Summons in its entirety.

1      background

The Bond Trustee has been informed by the Issuer that it is seeking certain
waivers to the Bond Terms as further described below.

As a consequence of the sharp fall in gas prices during the course of 2023 and
the delay in bringing Blythe H2 on to production at the expected gas flow
rate, the liquidity position of the Company has become an important area of
focus. The Company is looking to maintain an adequate liquidity buffer to
secure stability during its process of discussions with bondholders. The
purpose of these discussions is:

a)    to secure pre-emptive waivers of potential covenant breaches;

b)    to agree measures to enable the Company to withstand short term
consequences of recent gas price developments; and

c)     to explore the most effective means of addressing the maturity of
the bond in September 2024.

In addition to self-help measures taken by the Company, liquidity is also
impacted by the requirement to pay cash interest on the Bond, with the next
payment due on 20 June 2023. Whilst discussions between the Company and the
Ad-Hoc Group (as defined below) of Bondholders progress, it is important for
stability that the payment date for the next interest payment be deferred to
31 July 2023. The current balance held on the debt service retention account
is €3.11 million, and will remain in place until the proposed deferred
coupon date.

Alleviation of the constraints and demands on the Company's liquidity
resulting from the Bond Terms would not only directly benefit the Company but
would be likely to have a significantly beneficial impact on the outcome of
other self-help measures. Any self-help measures will be considerably more
difficult if there is an impending breach of Bond Terms, including financial
covenants, as at 30 June 2023.

The Issuer has further made the Bond Trustee aware that pursuant to the LOG
Debt held by London Oil and Gas ("LOG") it is an immediate event of default
if, by reason of actual or anticipated financial difficulties, any member of
the Group commences negotiations with one or more of its creditors (excluding
LOG) with a view to rescheduling any of its indebtedness.

This means that, unless an amendment is agreed, a cross default in respect of
the LOG Debt may be triggered under the Bond Terms as a result of negotiations
between the Issuer and the Bondholders. The LOG Debt is subject to a
subordination agreement with the Bond Trustee which inter alia restricts LOG
from taking action against IOG whilst amounts due under the Bonds remain
outstanding. Accordingly, LOG's ability to do anything as a result of any
default under the LOG Debt will be severely limited. However, a cross default
provision exists whereby IOG would trigger an event of default under the Bond
Terms in the event that any creditor (including LOG) became entitled to
declare financial indebtedness due and payable prior to its maturity date as a
result of the event of default.

Consequently, it is requested that the Bond Terms are amended so that a
default under the Bond Terms arising out of cross default from a claimed LOG
Debt event of default due to discussions taking place between the Issuer and
Bondholders is waived until 31 July 2023, as further specified in item 2
below.

The Issuer has informed the Bond Trustee that it has received voting
undertakings in support of the Proposal from Bondholders controlling more than
50 per cent. of the Voting Bonds (the "Ad-Hoc Group").

The Ad-Hoc Group contemplates to engage ABG Sundal Collier ASA ("ABGSC") as
advisor to the Bond Trustee (on behalf of itself and the Bondholders). The
Issuer has agreed to cover the fees of ABGSC. However, in the event that the
Issuer does not cover the fees of ABGSC, it is contemplated that the Bond
Trustee shall be authorised to cover such unpaid fees from the recovery of the
Bondholders under the Finance Documents, limited to 1% of the aggregate
Nominal Amount of the Outstanding Bonds at the date of this Summons.

2      The PROPOSAL

Based on the above, the Issuer has requested the Bond Trustee to summon a
Written Resolution to propose that the Bondholders resolve to approve the
following resolution (the "Proposal"):

(a)   that the minimum Interest Cover Ratio requirement pursuant to
paragraph 13.20(c) of the Bond Terms with respect to the Relevant Period
ending on 30 June 2023 is waived;

(b)   that the payment date for the interest payment due to be made by the
Issuer on 20 June 2023 pursuant to paragraph 9.2 of the Bond Terms is deferred
from 20 June 2023 to 31 July 2023 (and shall be payable to the holders of the
Bonds on such deferred payment date with the record date for the payment being
two Business Days prior to such deferred payment date, and for the avoidance
of doubt no additional interest shall accrue on such amounts as a result of
the deferral);

(c)   that any event of default under the Bond Terms pursuant to paragraph
14.1(e) arising out of a composition, compromise, assignment or arrangement
with any creditor (including LOG) in connection with the circumstances
described above is waived until 31 July 2023;

(d)   that any event of default under the Bond Terms pursuant to paragraph
14.1(d)(iv) arising out of cross default from a claimed event of default under
the LOG Debt caused by discussions taking place or any agreement or
arrangement being entered into between the Company and Bondholders (as well as
the Company and any other creditor of the Company) is waived until 31 July
2023, and the Bondholders consent to the Issuer entering into negotiations
with LOG to agree a formal written waiver of any event of default under the
LOG Debt caused by the above;

(e)   that the Bondholders confirm that all fees, costs and expenses
incurred by the Bond Trustee in connection with the engagement of ABGSC, to
the extent not covered by the Issuer, shall be treated in the same manner as
fees, costs and expenses incurred under the Bond Trustee Fee Agreement,
including, but not limited to:

(i)    that any Partial Payment received shall firstly be used to
settlement of fees, costs and expenses incurred by the Bond Trustee prior to
payment of any amounts outstanding under the Bond Terms, cf. Clause 8.3
(Partial Payments) of the Bond Terms; and

(ii)   that the Bond Trustee may make a reduction in the Bondholders'
proceeds equal to the amount owed to ABGSC in the event that the Issuer does
not reimburse the Bond Trustee's incurred fees, costs and expenses, cf.
paragraph (g) of Clause 16.4 (Expenses, liability and indemnity) of the Bond
Terms; and

(f)    that the Bond Trustee shall be authorised and instructed to
implement and effect the Proposal.

The Proposal shall take effect from the date on which it has been duly
approved by the necessary 2/3 majority of Voting Bonds as per Clause 15.5
(Written Resolutions). Upon such approval, the Issuer and the Bond Trustee
shall enter into an amendment agreement documenting the waivers granted
herein.

Other than the waivers and amendments contemplated by the Proposal (including
any necessary logical and/or related adjustments), the Bond Terms shall remain
unchanged and continue to apply in their existing form.

3      evaluation of the PROPOSAL

The Proposal is put forward to the Bondholders without further evaluation or
recommendation from the Bond Trustee, and the Bond Trustee emphasises that
each Bondholder should cast its vote based on its own evaluation of the
Proposal. Nothing herein shall constitute a recommendation to the Bondholders
by the Bond Trustee.

The Bondholders must independently evaluate whether the Proposal is acceptable
and vote accordingly. The Bond Trustee urges each Bondholder to seek advice in
order to evaluate the Proposal.

4      Further information

Subject to adoption of the Proposed Resolution, the Bond Trustee will (on
behalf of itself and the Bondholders) retain ABGSC as financial advisor (the
"Advisor"). Bondholders may contact the Advisor for further information:

Ola Nygård, +47 41 21 34 10, projectatom@abgsc.no
(mailto:projectatom@abgsc.no)

Harald Erichsen, +47 48 01 60 23, projectatom@abgsc.no
(mailto:projectatom@abgsc.no) .

The Advisor acts solely for the Bond Trustee and the Bondholders and no-one
else in connection with the Proposal. No due diligence investigations have
been carried out by the Advisor with respect to the Issuer, and the Advisor
expressly disclaims any and all liability whatsoever in connection with the
Proposal (including but not limited to in respect of the information herein).

For further questions to the Bond Trustee, please contact Lars Erik Lærum,
+47 22 87 94 06, laerum@nordictrustee.com (mailto:laerum@nordictrustee.com) .

5      written resolution

Bondholders are hereby provided with a voting request for a Written Resolution
pursuant to Clause 15.5 (Written Resolutions). For the avoidance of doubt, no
Bondholders' Meeting will be held.

It is proposed that the Bondholders resolve the following (the "Proposed
Resolution"):

"The Bondholders approve the Proposal as described in section 2 (The Proposal)
of this Summons on the conditions set out herein.

The Bondholders approve and instruct the Bond Trustee to engage ABGSC on the
terms set out herein.

The Bond Trustee is hereby authorized to implement the Proposal and carry out
other necessary work to implement the Proposal, including to prepare,
negotiate, finalize and enter into all necessary agreements in connection with
documenting the decisions made by way of this Written Resolution as well as
carry out necessary completion work, including agreeing on necessary
amendments to the Bond Terms and other Finance Documents."

* * * *

Voting Period: The Voting Period shall expire ten (10) Business Days after the
date of this Summons, being on 3 July 2023 at 16:00 Oslo time. The Bond
Trustee must have received all votes necessary in order for the Written
Resolution to be passed with the requisite majority under the Bond Terms prior
to the expiration of the Voting Period.

How to vote: A scan of a duly completed and signed voting form (attached
hereto as Appendix 1), together with proof of ownership/holdings must be
received by the Bond Trustee no later than at the end of the Voting Period and
must be submitted by e-mail to mail@nordictrustee.com
(mailto:mail@nordictrustee.com) .

A Proposed Resolution will be passed if either: (a) Bondholders representing
at least a 2/3 majority of the total number of Voting Bonds vote in favour of
the relevant Proposed Resolution prior to the expiry of the Voting Period; or
(b) (i) a quorum representing at least 50% of the total number of Voting Bonds
submits a timely response to the Summons and (ii) the votes cast in favour of
the relevant Proposed Resolution represent at least a 2/3 majority of the
Voting Bonds that timely responded to the Summons.

If no resolution is passed prior to the expiry of the Voting Period, the
number of votes shall be calculated at the expiry of the Voting Period, and a
decision will be made based on the quorum and majority requirements set out in
Clause 15.1 (Authority of the Bondholders' Meetings).

The effective date of a Written Resolution passed prior to the expiry of the
Voting Period is the date when the resolution is approved by the last
Bondholder that results in the necessary voting majority being achieved.

If the above resolution is not adopted as proposed herein, the Bond Terms and
other Finance Documents will remain unchanged.

 

Yours sincerely,

Nordic Trustee AS

 

Appendices:

Appendix 1 - Voting form

 

Appendix 1: Voting Form - Written Resolution

 ISIN:  NO0010863236  Independent Oil and Gas plc. FRN senior secured EUR 130,000,000 bond 2019/2024

The undersigned holder or authorised person/entity, votes in the following
manner to the Proposed Resolution as defined in the Summons for a Written
Resolution dated 16 June 2023:

 

In favour of the Proposed Resolution

Against the Proposed Resolution

 ISIN            Amount of bonds owned

NO0010863236
 Custodian Name  Account number at Custodian
 Company         Day time telephone number
                 E-mail

Enclosed to this form is the complete printout from our custodian/VPS(( 1 )),
verifying our bondholding in the bond issue as of ______________________ 2023.

We acknowledge that Nordic Trustee AS in relation to the Written Resolution
for verification purpose may obtain information regarding our holding of Bonds
on the above stated account in the securities register VPS.

We consent to the following information being shared with the Advisor:

Our identity and amounts of Bonds owned

Our vote

_____________________
___________________________________________

Place,
date
Authorized signature

Return by mail:

Nordic Trustee AS

PO Box 1470 Vika

N-0116 Oslo

Norway

Telephone:           +47 22 87 94 00

E-mail:   mail@nordictrustee.com

 

 1  If the Bonds are held in custody other than in the VPS, evidence provided
from the custodian confirming that (i) you are the owner of the Bonds, (ii) in
which account number the Bonds are held, and (iii) the amount of Bonds owned.

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