Oilexco North Sea Faces Insolvency
Oilexco announced today that its wholly-owned subsidiary, Oilexco North Sea Limited ("ONSL"), intends to file petitions for administration in the High Court in the United Kingdom as soon as reasonably practicable but likely as early as next week. Oilexco Incorporated is considering its options in light of this development but at this time remains solvent and committed to the strategic review process that was previously announced.
As the Company previously announced on December 17, 2008, incremental funding was necessary in addition to the bridge funding announced that day, although no assurances were given that such funding would become available. Today, the Company was advised by The Royal Bank of Scotland plc on behalf of the syndicate of lenders that they are not prepared to advance any further funding to ONSL. Oilexco does not have any other source of funding at this time and has therefore concluded that an Administration must be pursued. Oilexco has been advised that funding for an Administration is in the process of being arranged by its senior secured lenders, subject to settlement of terms with the prospective administrators and counsel. Accordingly, all parties expect that safe and orderly operations will continue throughout this period.
As also announced on December 17, 2008, Morgan Stanley & Co. Limited and Merrill Lynch International have been retained by Oilexco in a strategic review process to seek alternative funding or the sale of the Company or some of its assets. Several parties have indicated significant interest in acquiring ONSL or all or substantially all of its assets. Oilexco understands that it is the intention of the proposed administrators to continue this process, with the intention of selling ONSL or all or substantially all of its assets in such a way as to maximize the value of the assets for all stakeholders, and maintain the business, its employees and systems as a going concern. However, there can be no certainty that any binding offers will be received or accepted or that any transaction will be completed or, if it is completed, that there will be any equity value for Oilexco shareholders. The shares of ONSL comprise substantially all of the assets of the Company.
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