Friday 24 November 2017

Providence pays Melody $20m and 'uncontested' Transocean sum

Providence had anticipated it would make the repayment in May of this year
Providence had anticipated it would make the repayment in May of this year
Michael Cogley

Michael Cogley

Irish exploration firm Providence Resources has repaid the $20m debt owed to Melody Business Finance after shareholders in the company passed the resolution to do so last Thursday.

Tony O'Reilly's firm received an extension on the debt facility in December, allowing it up to May 2018 if needed.

Providence had anticipated it would make the repayment in May of this year.

Providence has also allocated 9,938,033 ordinary shares to Melody.

At the EGM, shareholders approved the company's plans to raise $73.4m (€65m) through a sale of shares to new and existing investors.

That money has been used in part to pay off Melody and to "discharge the balance of uncontested sums" that it owes to Transocean drilling.

In April a UK court ordered Providence to pay Transocean millions in drilling fees, in what came as a shock to the company's chief executive O'Reilly.

Speaking at the EGM Mr O'Reilly said the Transocean decision came contrary to any legal advice the company had received.

The Providence chief also outlined the company's intention to appeal the decision made.

Cleaning up the company's balance sheet means that Providence can now focus on finalising drilling deals without financial pressure.

The company has said that some of the world's biggest oil and gas companies have shown interest in its Druid off-shore oil project.

"This should lead to an improved outcome with respect to farm-in deals and consequently a better outcome for shareholders," Davy Stockbrokers said in a note.

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