Antrim Energy is seeling its subsidiary to First Oil Expro Limited to raise the cash needed for the Causeway field development in the UK North Sea.
Antrim Energy Inc. has entered into an agreement with First Oil Expro Limited (“FOE”) pursuant to which, FOE will buy all of the issued and outstanding shares in the capital of Antrim’s UK subsidiary, Antrim Resources (N.I.) Limited (“ARNIL”) for $53 million in cash, plus the assumption of certain liabilities and adjusted working capital, from which Antrim will settle on closing all outstanding obligations under its Payment and Oil Swap agreements with Credit Suisse AG and Credit Suisse International, (collectively, “CS”).
Under terms of the Transaction the economic date is January 1, 2014 and a $5 million deposit is to be received to be applied towards the purchase price. Antrim will retain its interest in P077 Block 21/28a (the “Fyne Licence”) and P1875 Block 21/29d (the “Erne Licence”), as well as FEL 1-13 in the Porcupine Basin offshore Ireland. The Transaction is subject to customary “fiduciary out” provisions, and is conditional upon, among other things, the approval of Antrim shareholders and the receipt of applicable regulatory approvals. The Agreement includes provision for payment of a Liquidated Damages fee of $5.3 million under certain circumstances if the Transaction is not completed.
“The Board of Directors of Antrim, after consultation with its financial and legal advisors, has unanimously approved entering into the Agreement and will recommend that Antrim shareholders approve the Transaction at a special meeting of shareholders to be convened and held for the purpose of approving the Transaction. Full details of the Transaction will be included in a management information circular and related proxy materials (collectively, the “Circular”) to be mailed to Antrim shareholders in accordance with applicable securities laws. Antrim expects to mail the Circular to Antrim shareholders prior to the end of February 2014,” Antrim said in a press release.
Antrim further said: “The Board of Directors’ recommendation follows an extensive process by the Company to secure additional viable financing needed to meet higher than expected capital costs to complete the Causeway development as well as meet its ongoing Payment and Oil Swap obligations with CS. This process was hindered by production interruptions caused by platform shutdowns and ongoing delays in completion of the Causeway electric submersible pump (“ESP”) and water injection facilities. These delays further negatively impacted available cash balances as hedged production volumes under the Oil Swap no longer matched actual production volumes. While ESP and water injection facilities are now expected to be operational by early Q2 2014, the operator has incurred further costs at Causeway and the Company has ongoing debt financing and oil swap obligations, which if not funded, could have resulted in the loss of the asset.”
Carlingford, a division of GFI Brokers Limited, advised and assisted Antrim in connection with the evaluation of the Transaction as well as the Company’s assessment of alternative financing arrangements including but not limited to a possible divestment of all or a part of Antrim’s Causeway asset, the sale of all or a portion of ARNIL, additional equity and debt refinancing. Antrim’s legal advisors are Burstall Winger LLP.
Following the closing of the Transaction, Antrim expects to have approximately $17 – $18 million in working capital and no debt.