Erin Energy Announces Agreement with Zenith Bank on Terms of Loan Facility

Proshare

Tuesday, April 05, 2016 11:12AM /Cardinal Stone Research 

Event
Yesterday, Erin Energy Corporation (NYSE MKT: ERN), an independent oil and gas exploration and production company focused on energy resources in sub-Saharan Africa listed on the New York and Johannesburg Stock Exchanges, announced it had obtained a waiver  to the funding requirements of the Debt Service Reserve Account associated with the Zenith Bank Note until December 31, 2016.  

The company was also granted a 90-day deferment of the principal payment previously due on March 31, 2016, whilst re-modification discussions of the loan structure continue. The company further stated that it has satisfied the interest obligations due March 31, 2016 and has formally submitted a loan re-modification proposal, which Zenith Bank is currently reviewing with final agreement expected during the second quarter of 2016.

Comment
According to Erin Energy's annual account, we think the initial exposure to Zenith Bank is about $100 million, net balance as at 31st December was $98.1million, accrued interest was $2.5 million. According to the initial agreement, Erin Energy was expected to pay quarterly principal and interest repayment of $9million.  

The first was due 31st March. So the company is seeking a restructuring and possible reduction and/or deferment of interest and principal repayment. The total exposure is just about 1% of Zenith Bank's total loans as at FY 2015 and 14.5% of the bank's exposure to the upstream oil and gas sector.  

We do not expect this to increase non-performing loans yet as the obligor honoured the first interest repayment due March 31st.  We have contacted Zenith Bank but yet to get details on the proposed terms. Details to follow after obtaining more information from the bank.  

Related NEWS
1.       ZENITHBANK: A weak close to a strong year

2.     ZENITHBANK Grows Interest Income by 11.1% as Loan Loss Expense Spikes by 135% QoQ in Q4’15

3.    ZENITHBANK’s Weaker than Expected Underlying 2015 Results Likely to Lead to Cuts in 2016 Consensus Estimates

4. ZENITHBANK Appoints Prof. Ibidapo-Obe and Gabriel Upkeh as Independent Non-Executive Directors

5.     ZENITHBANK Proposes 155kobo per share Dividend in 2015 Audited Result,(SP:N12.83k)

6.      ZENITHBANK Healthy upside potential even after mixed Q3 - Proshare

7.      ZENITHBANK Impairment  Charges  Drops by 50% in Q3 2015

8.     ZENITHBANK Net Interest Income Grows by 12.6% in Q3’15

9.      ZENITHBANK Declares N83.09 bn PAT in Q3'15 result,(SP:N17.78k)

10.  Zenith Bank Q3 2015 returns slower growth (9% y/y) in funding income

11.   ZENITHBANK on Course to Consolidate Its Industry Leadership; Grows Earnings by 55%

12.  ZENITHBANK declares 25kobo Interim Dividend in Q2'15 result,(SP:N16.40k)

13.  ZENITHBANK Rated NEUTRAL as Income Lines Help Drive PBT Up by 35%

 

READ MORE:
Related News
SCROLL TO TOP