Lamprell shares jump as oil company secures bank waivers

Lamprell shares soared to their highest in six weeks on Wednesday after the oil rig maker received banking waivers for its debt facilities.

Shares jumped over 15% as the company said it had succeeded in negotiating waivers to its banking covenants which were due to be tested on December 31st.

The engineering and contracting services provider said its working capital had improved significantly in recent months, reporting a net cash position of around $100m for 2012.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Higher revenues and enforcement of tighter financial controls helped the company bounce back following five profit warnings in November which stated losses would be seven times greater than first expected. Shares lost about two thirds of their value last year.

The support from lenders is expected to help bolster the business in 2013.

"As anticipated, the revenue levels will reduce in the early part of 2013, however we remain confident that, with the support of our core lenders, we will continue to have adequate working capital to finance the business and to have access to the necessary financing arrangements in order to fund certain new projects," the company said in a statement.

"In addition, the company is moving forward with a wider financing of the business which will provide a longer-term financial platform to fund its growing activities. This is expected to be completed during the first half of 2013."

Lamprell will this year focus on developing more oil rigs including a project in the Caspian Sea. The rig has been successfully launched in the water on schedule despite challenging weather conditions in the region.

The company has also been awarded a North Sea project valued at $40m.

"This year has been a difficult year for the company but these positive developments are a clear indication that the business remains robust and is rapidly returning to normal operations, Chairman John Kennedy added.

RD