Trafigura takesstake in Argentine-focused oil and gas produce
Trafigura, the global commodities trader, has taken a 6 per cent stake in President Energy, a London-listed oil and gas producer with assets in Argentina, as part of a deal to help the small company pay down debt.
The deal, in which Trafigura has agreed to subscribe to $4m of new shares in President at a price of 4.04p, has been designed to help the small company pay off advances made to it last year by the commodities trader. In July, Trafigura made an undisclosed advance to President at the same time as agreeing to buy certain production from its assets in the Rio Negro province of Argentina. As part of the arrangements announced on Monday, Trafigura has the option to take a further $6m of new shares in President at a price of 4.65p apiece. President announced on Monday a debt-for-equity swap with a company owned by its chairman and biggest shareholder, Peter Levine, which will increase his holding in the group to 29.99 per cent. Mr Levine’s company IYA will initially convert $1.95m of debt extended to President as part of an unsecured loan facility at a price of 4.04p a share. IYA then wants the option to convert up to a further $2.875m of debt into President shares at a price of 4.65p per share if and when Trafigura subscribes to further new shares in the London-listed energy group. President said the two transactions, which will require shareholder approval at a general meeting on February 6, combined would reduce its net debt by $5.95m and could reduce it up as much as $14.8m. Mr Levine on Monday described Trafigura as an “important off-taker of the group”. “We welcome Trafigura as a significant stakeholder in President,” he added. “The practical effect of both the subscriptions and conversions announced today will immediately reduce debt by a minimum of nearly $6m and potentially nearly $15m, which will benefit both the balance sheet and profit-and-loss account,” he said. “The group on present projections will be free of all of its existing third party financial debt within the next 18 months.”