PMO1

24

Comments

  • My guess is that they would pay a proportion if the December interest payment. I.e. how many days worth to the point of settlement.
  • Just a thought...
    The addtional cash option is going to be oversubscribed imho as bondholders aren't in the habit of owning high risk equity, so I suspect that even if you choose the additional cash option I think you will be scaled back.
  • Hi
    The writing has been on the wall for a while in all honestly.
    Listening to the recent interview with the CEO, the BP deal was based on $55 oil. I don't think we are going to see that again anytime soon especially if Biden brings Iran back into the fold. Just a thought.
    Anyway, it could have been a lot worse and we have had the benefit of a high interest rate.
    Below is a piece from the Bond section of Premier's site. This reads to me that the December interest will be paid. Thoughts appreciated, please.

    """""Next Steps

    At this stage Premier is not asking existing holders of the Retail Bonds to take any action. The Retail Bonds remain listed on the UK Listing Authority's Official List and admitted to trading on the London Stock Exchange's regulated market and through the electronic Order Book for Retail Bonds.

    Premier will in due course seek consent from Existing Creditors (including holders of the Retail Bonds) for the Transaction and, in order to support implementation of the Transaction, an extension of the existing maturity date of its debt facilities (including the Retail Bonds) from May 2021 to March 2022, in each case by means of court-approved restructuring plans. Detailed instructions on the actions to be taken by holders of the Retail Bonds in relation to this process will be provided in due course"""".
  • Call me naive if you like but that quote from the website implies that the bonds will continue in existence until their (extended) maturity date which would be at par. There is no provision, as far as I am aware, for 'maturity' to be other than at par. It may seem illogical to 'take out' the equity holders but leave the bond holders untouched but as JammyDodger said bondholders aren't in the habit of owning high risk equities and this may be a reason why.
  • I had struggled initially to find the full details of the proposals on the Premier Oil website but having now done so see that I was indeed being naive! The need to extend the maturity date would seem to be because it is expected that the various processes will not be completed until after May 2021. The details include the statement that "The steps above will result in the repayment and cancellation of all of Premier’s existing debt, including the Retail Bonds, on completion of the Transaction." Oh well, perhaps we can agree to the extension and then hope that it drags on until March 2022 and the maturity date is reached. In the meantime I assume that we will continue to receive our full interest payments.
  • From what I have read the deal is expected to complete during Q1 of 2021. The bonds are due to mature on 31 May 2021. As there are going to be quite a few negotiations and court meetings there may be delays due to Covid-19 or legal issues so I believe seeking an extension to maturity is sensible to avoid default.

    Unfortunately my belief is any coupon payment will be classed as a drawdown and will be deducted from the cash amount available to bondholders. The devil of the deal will be in the detail.

    I agree with Dandigirl that the writing was on the wall. There was a real risk of default and bankruptcy at current oil prices. The company was finding it very difficult to get their solution to work. Not an ideal scenario for bondholders but at least some certainty of getting some return of capital whatever happens to the oil price. For the brave there may be some recovery taking the shares as the company will have much lower levels of debt and be able to turn a profit at lower oil prices. On the down side the free float of PMO shares is going to be very low - between 16-23% so that will dampen future share prices. My investments in ENQ1 and PMO1 were modest punts so I will probably continue my gamble and hope for the best.
  • May be a wrong forum, but what does this mean for Enquest, I wonder?!
  • These are now trading above the estimated value of them a while back, no doubt on the increased value of the ords - or not.

    See here

    https://www.lemonfool.co.uk/viewtopic.php?f=52&t=5926&start=60
  • VSIVSI
    edited December 2020
    Given the "restructuring" scenario, I assume 3.25pts of the bond price accounts for the accrued interest payable later this month? Not sure... Let's see if the px drops a few pts after cash interest is paid.

    Also, mkt is perhaps seeing upside in cash-generation ability of post-merger, low-levered entity given where oil prices are forecast to be next yr and beyond - that is being reflected through PMO securities presently (as the other entity is still private). And I suppose this is being reflected more through the bond (& other debt) price vs. share price as, depending upon the cash offer take up by debt holders, creditors will own between 11%-18% of the new entity's shares, whereas existing PMO shareholders will own ~5%.

    Finally, Oil is up 26% in the last month alone so that helps too. I saw some bankers post their 2021 Brent forecast at ~$50/boe and $60+ for 2022.
  • Please see the notes on the treatment of Premier debt holders below.
    It quotes recovery of 61 & 75 cents "on average across existing creditors". This implies some will receive less that this. Does anyone know how this will affect the retail bond?

    “The Premier Group’s outstanding letters of credit of approximately US$400 million will also be refinanced. This, together with the US$1.23 billion cash payment, represents approximately 61 cents on the dollar recovery for Existing Creditors (on average across Existing Creditors). In addition, Existing Creditors will receive (i) new shares in the Combined Group and/or (ii) a cash alternative which is capped at a maximum of US$175 million (the “Partial Cash Alternative”). It is expected that Existing Creditors will be able to subscribe in cash at a pre agreed price for those new shares in the Combined Group which would have been issued to Existing Creditors if they had not elected to take the partial cash alternative (the “Top-Up Election”). The combination of these provisions would result in a total recovery of approximately 75 cents on the dollar (on average across Existing Creditors) in cash at completion of the Transaction for those 2 Plus RCF drawings as under the Senior RCF Facility and Super Senior RCF/LC Facility between 1 July 2020 and the Restructuring Effective Date 6 electing for the partial cash alternative. For those Existing Creditors who elect to take new shares they would have a base cash recovery of approximately 61 cents on the dollar (on average across Existing Creditors) with the additional potential value of those shares based on the future valuation of the Combined Group.”

  • edited December 2020
    To be honest, I haven't a clue what all this means for bond holders but a here is a comment from an oil blog this a.m.

    """""I listened to the webcast and conference call yesterday at the denouement of Premier Consolidated Oilfields was formally executed. The good news is that all the good operational work done by the company over the last few years is going to now be free of the debt burden and within the new structure should make for a really exciting outfit.

    With the approval a formality in Q1 2021 it will become Harbour Energy Plc in the new year with new management led by Linda Cook as CEO and Phil Kirk as President and CEO Europe. Currently, with Tony Durrant having ‘stepped down’ it is ironic that Richard Rose is at the controls and with the CFO role yet to be filled who knows what might happen?""""

    If anyone can interpret the Prospectus from a bond holder's perspective it would be appreciated.
  • Sold half of them a couple or so weeks ago. Sold the rest this week - I don't particularly want to end up with part payment in shares and the all cash option may be a bit less than current market value.

    I had thought about holding those last 50% just to get bit more interest, but decided against that in the end.

    The fact that nobody appears to understand completely what's going on was also a factor - plus a few negative comments on the Lemon Fool board


    Good luck for those that decide to hold

    Woz
  • Having perused all 600 odd pages of the prospectus, (Yes - I'm exaggerating - I didn't read them all), I think that we bond holders are defined as Senior Restructuring Plan Creditors and, as such, will be entitled to upfront cash of approximately 61 cents on the dollar plus the choice, as Senior Creditors, of either creditor shares or a partial cash alternative of up to 14 cents on the dollar, approximately. That would suggest to me that we are looking at approx. 75 as a repayment figure compared with the current LSE price of 75.85/79.50. I would also assume that in the meantime the interest payments will be maintained at 6.5% as happened a couple of days ago.
  • Just to clarify, if the restructuring goes through according to the timetable there would be no further interest payment due and I would assume that accrued interest would be deemed to be included in upfront cash. On that basis the current sale price in the market (which would include entitlement to a bit of accrued interest) may be a worthwhile consideration.
  • Cents or pence?

    Not sure posters to Lemon Tree understand either.

    Prospectus is a shocker. I don't thank I'm that stupid but it is unintelligible to me.

  • I don't think it makes any difference! The reference is to "61 cents on the dollar" which presumably would be the same as 61p on the pound or 61%. Anyway, having re-read what I had written I took my own advice and sold out at £77.05.
    And, dandigirl, you're not stupid you are just like the rest of the rest of us long-suffering individuals who become totally frustrated by the inability of organisations to expain anything in straightforward terms and employ 'experts' to deliberately make it more complex than it needs to be.
  • I’ve sold out (at a loss). I don’t pretend to be an expert stock picker but pride myself on understanding my investments. Bearing this was a retail bond I think there should have been a duty to make it understandable for the average investor. Thanks to all those who had tried to explain in simplish terms what was happening - dandigirl and others.
  • Like Geoffp I sold out yesterday at 77.05, which considering the immense uncertainty I thought was the wisest course of action. Having had the bonds since IPO and given the interest to date that I have had at least I am on the right side. The buyer is now looking forward with a cheap purchase and a growing oil price. A win win for them and. a loss loss for us poor suckers.

    Must try to be more optimistic. At least with Boris on Strictly this afternoon we can all have a chuckle!!
  • I just looked at my stock history & dividends for PMO1. I held an average of ca. 15-20,000 over 4 years and did some trading along the way. After receiving dividends of £5466 over that period, I made the princely sum of £1800, excluding the effects of inflation.

    My remaining bonds are in Tesco (didn't buy enough, showing ca. 30% up), Ladbrokes (bought more in the March dip & sold some back), a relatively small sum in Enquest and far too much in Burford.
  • For those still holding, I have just had another go at the PMO site and found the following:

    """"Premier will in due course seek consent from Existing Creditors (including holders of the Retail Bonds) for the Transaction and, in order to support implementation of the Transaction, an extension of the existing maturity date of its debt facilities (including the Retail Bonds) from May 2021 to March 2022, in each case by means of court-approved restructuring plans. Detailed instructions on the actions to be taken by holders of the Retail Bonds in relation to this process will be included in the explanatory statement in respect of the restructuring plans, which Premier expects to be published on or around 26 January 2021"""

    I also read:

    """"Premier noted in its Announcement dated 6 October 2020 its expectation that the Existing Creditors on average (including certain super senior creditors, who will be repaid in priority to holders of the Retail Bonds and other senior creditors of Premier) will receive a total recovery of approximately 75 pence in the pound in cash at completion of the Transaction for those electing for the partial cash alternative. For those Existing Creditors who elect to take new shares they would have a base cash recovery of approximately 61 pence in the pound (on average across Existing Creditors) with the additional potential value of those shares based on the future valuation of the combined group."""

    This suggests approx. 75p in cash or 61p of share value as per geoffp's earlier posts.

    Explanatory statement on or around 26/01, as above, then.

    It won't make a jot of difference but I will vote against, especially in respect of the proposal to extend the maturity date of the Retail Bond to 03/22.

    We will continue to hold for the time being.

    Happy New Year everyone.



  • dandigirl, thank you for your input on this and all other ORB bonds that you have commented on. I am sure i'm not the only one to always have read your posts and be appreciative of them so thank you for your continuous musings and do please continue in this new year.
    Happy and hopefully prosperous New Year to all readers and let's all try and keep chirping away for the family that is Fixed Income Investor forumites.
  • Sussexmade, I echo your words about comments and info from dandigirl. They are always welcome as are all the information from other contributors.
    Even though I have sold PMO1 I continue to read all comments on these boards since sometimes the read across can be most enlightening.

    HNY to everybody

    Steve
  • Thank you muchly. Appreciated.

    They are just thoughts and musings but specific to our holdings mainly present but sometimes past and future. I try to be positive but realistic - and I try hard not to be negative as we all have our own specific views on risk. This is a bit of a hobby for me - but a serious hobby. I think that we take some risks that a few of you might suck your teeth at. :smile: Similarly vice-versa. However, for the main part we all appear to come out all right.

    We have had our losses, ironically from those you would not expect - Lloyds Bank and those ECNs - shame on Horta-Osario - and Coop Bank notes when that bunch of hedge funds took it over a few years back. But these hedge funds appear not to have understood what they were doing and the scale of the task as they are still enmeshed with the Coop Bank and look likely to be for a while yet.

    One regret though, we sold out of Burford too soon when Mucky Waters arrived on the scene. Having looked more closely at the business model, we just couldn't get comfortable at the time as reputation was all. But we are not repurchasing. :smile:

    A thought I have had for many months now has been reinforced last year - is not to go near the big banks - they are uninvestable. As they are now heavily regulated and the subject of Government policy, they might as well be nationalised. And their managements cannot be trusted not to find ways of avoiding obligations - See Coop and Lloyds above. The only people making money are their executives. Horta-Osario had made millions.

    I finish by saying that I too like reading of the actions of others. It is interesting to see what others are buying and selling in order to give ideas of following suit or not. The odd loss is okay provided we are in profit overall.

    Anyway, best wishes to all for 2021. First up is PMO1 later this month. And one to watch around the middle of the year is RE.B.

    Happy New Year.
  • edited January 4
    Happy New Year to all. And thank you to all those that post. Be it buy, sell, new issues, voting fee (bribe), etc, etc comments. Also a thank you for the site administrators, shame new bond research is no more but we know its not by choice
  • Glad to see some new postings and just hope we can keep it up as fear that " if we don't use it we might lose it " could be the case.
    dandigirl-you said look out for RE. B. sorry you have lost me-did you mean REA ?

    I have traded in and out a few times Regional Reit ords over the last few weeks ( they are currently trading around 36pct under NAV ) and hold a reasonable number of the 4.5% 2024 bonds. They are sub par with a bid I think now and am thinking of taking a few more and moreso if can get entry at 97/98. Does anybody feel strongly about this bond either way.?


  • Sussexmade.
    I hold RGL ordinary shares which may well be 20% at least under NAV. Profits (sic) of doom foretell of the death of the office but just think
    a) with social distancing and job cuts half the number of people need twice as much space = the same space
    b) much of the office space if unlet may get transposed to residential which may have higher values
    c) rents in the 90% are still being received
    d) look at the solid tenant base (much of which is HMGov)

    Yes there may be further impairments at the year end but there is solid value there. Not a sweet spot at the moment with all the focus on SHED, WHR and BBOX but more opportunity than their bonds I believe.

    As always DYOR

    Steve
  • whitebeard/Steve-thanks for that. I did quite well trading in the ords and might well re-enter soon but timing is the important thing. Lots of Reits trading at up to 35/40 pct below NAV ( SREI, BREI ) so quite a bit to play for still. The bonds look pretty safe I think now so I might well buy a few more with a rough ytm of 5% over around 3.66 years and then try and time a purchase of ords a bit later ( maybe when there's even more bad news !? ( whatever else could go wrong !! ) ). Thanks for the post.
  • sussexmade: I mean..

    https://www.londonstockexchange.com/stock/RE.B/r-e-a-holdings-plc/company-page

    These 9% prefs are the subject of a separate thread.

    Agree with whitebeard re: RGL, we have both shares and the bond. Management look to be alert and thinking - see the November trading update and strategy review. No tangible security for the bonds but there are covenants and a negative pledge. Don't have many bonds, perhaps we should buy more too.



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