SEPLAT PLC Company Update - Completes debt restructuring programme

SEPLAT recently announced key milestones in its debt restructuring programme. One, the successful refinancing of its existing (LIBOR + 6%) $300 million Revolving Credit Facility (RCF) due December 2018 ($120 million drawn down as at FY’17) with a new four-year $300 million RCF due June 2022, priced at LIBOR+6%. Two, the issuance of a $350 million senior note due 2023, priced at 9.25%. Upon completion of the refinancing (scheduled for 21 March 2018), SEPLAT’s gross debt will be $550 million.

We highlight a couple of positives from the programme. To start with, whilst the pricing on the new RCF remains unchanged, the 9.25% pricing on the senior note is cheaper than the existing Term loans (priced at LIBOR+8.75%) especially in light of the hawkish global interest rate outlook. Overall, the refinancing programme presents modest net positive impact on interest expense over the medium term through FY’22.

In our view, SEPLAT appears to benefit more from the liquidity ease that berths with the programme. We see this liquidity ease particularly valuable considering the expansion plans in SEPLAT’s pipeline in the short to medium term, even as SEPLAT is just recuperating from earnings slump in recent years. Our view on the company’s operations remains positive, buoyed by cautiously optimistic outlook on stability in the Niger Delta region, increasing gas volumes and stable oil prices.