Premier Oil offers to exchange convertible bonds

Oil company Premier Oil is inviting holders of its guaranteed convertible bonds due 2014 to trade them in for similar bonds due in 2018.

The new bonds will have a conversion price of $7.00 and a coupon (interest rate) of 2.5%. This compares with the existing convertible bonds, which have a conversion price of $6.69 and a coupon of 2.875%.

The exchange will only go ahead if Premier gets enough takers in respect of $100m of the existing bonds. In order to participate in the exchange offer, a holder must validly offer for exchange at least $200,000 in aggregate principal amount of existing bonds.

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

The idea behind the exchange is to extend the maturity of the bonds while saving a few bob on the coupon and gaining on the conversion price. Premier had no comment on what the advantages might be to the holders of the existing 2014 bonds.

JH