IGas confirmed this morning it was having discussions with Trans European Oil & Gas, thought to be a leading holder of its secured debt.
In a brief statement issued this morning, IGas said Trans European Oil & Gas (TEOG) had proposed the sale of IGas’s conventional assets, which include oil and gas fields in the Sussex Weald and the East Midlands and sites in North West England.
TEOG is backed by the global investment firm, KKR (Kohlberg Kravis Roberts). Yesterday, Sky News reported that TEOG was mounting an aggressive raid on IGas assets and had hired the investment bank, Evercore.
IGas said this morning it continued “to discuss a range of options with a number of key stakeholders” as it sought a capital structure “appropriate for the business in the current operating environment”.
The statement continued:
“Those include discussions with bondholder Trans European Oil & Gas (“TEOG”) (whose largest shareholder is understood to be KKR) who has proposed a sale of the company’s conventional assets.
“The board will continue discussions with its key stakeholders concurrent with a number of strategic investors as it continues to assess options which will allow the Company’s capital structure to be sustainable in the current oil price environment and enable the Group to capitalise on value accretive opportunities.”
In June, a then undisclosed bondholder, acquired what was thought to be about 34% of IGas secured bonds. This represented a potential blocking vote.
Last month, IGas warned in its half-yearly accounts that it expected to default on its daily liquidity commitments in the second half of October. The company also raised questions about its ability to operate as a going concern if bondholders exercised their rights to early repayment. Details
Last week, IGas asked bondholders for a waiver of its debt commitments. Holders of unsecured bonds agreed unanimously to the request but only 43.6% of voting secured bondholders backed the move. Details
Sky News reported comments by an insider who said TEOG was pursuing a “loan-to-own” strategy where an investor buys into a company’s debt to secure control of the company or its assets.
TEOG said it was established to acquire and operate onshore oil and gas fields across Europe. Its website strapline reads:
“Considered onshore hydrocarbon extraction utilising non-conventional techniques in conventional oil and gas fields”.
IGas’s most recent accounts estimated its conventional interests at US$ 287 million. A report by auditors, DeGolyerr and MacNaughten, earlier this month estimated IGas had 11 trillion cubic feet of potential recoverable gas resources in its UK shale portfolio (IGas Reserves and Resources as of 30 June).