Afren share price: shareholders urged to back restructuring plan as AGM looms

Afren Plc (LON:AFR) is gearing up for its first annual general meeting (AGM) since its fortunes tumbled last year and shareholder value collapsed.

The company’s board urged shareholders to approve the proposed fundamental restructuring of Afren’s debt and capital, which would see existing shareholders’ interest diluted to less than 15 percent. The remaining equity will be allocated to creditors via a debt-for-equity swap, while £49.2 million of new shares valued at 1p each will be offered to shareholders as compensation for the devaluation of their current stakes.

A no vote would see the company having to sell all of its assets “no later than 31 December 2016” and holds “no prospect of any value” to shareholders, Afren said in its statement.

“The recommended restructuring, combined with the open offer, is the only viable opportunity for our shareholders to realise any value from their investment in the company,” chief executive Alan Linn commented. “I urge all Afren shareholders to recognise this fact and vote to retain their active interest in the company by voting in favour of the proposed debt restructuring and refinancing.”

Meanwhile, Linn has met with the wife of a Nigerian general, whose company holds a seven percent stake in Afren, in a bid to secure backing for the deal, The Times reported yesterday.

Afren is holding its AGM this Thursday, while the extraordinary general meeting at which the restructuring vote will take place will be held on July 24.

Today the company launched a dedicated website for providing information on the EGM and the restructuring plan – www.afrenegmvote.com.

Afren’s share price opened with another surge of selling pressure today, dropping 16 percent to 1.38p, after some 10 percent were shed on Friday. One year ago

Afren shares hovered above 145p.

Earlier this month, Afren announced that an $11.9 million interest payment, due to its 2020 bond holders by the end of June, will not be made.

It will be the second debt default the company has had to endure, following the failure to meet obligations in March.

The company is still reeling from last year following the shock ousting of its founder and then-chief executive Osman Shahenshah in a scandal concerning a series of unauthorised payments. The company also suffered from a write-down of $0.9 billion on reserves at the Barda Rash field in Iraq and a $1.1 billion hit from the lower oil price.