The deal had been considered a reverse takeover but the amount payable on completion was reduced to $15 million (from $40 million) following an increase in the dividend paid from Premier to Eon, bringing the total payable to $135 million. This allows the transaction to fall into the Class 1 category and its bonds and shares to resume trading.
The rise needs putting in perspective, Premier is still down more than 70% in the last 12 months and the key issue facing investors in the company has not gone away. Namely the elevated levels of net debt. Macquarie forecasts these will hit $2.58 billion in 2016 against a current market cap of little more than £200 million.
The commodities focused investment bank, which has an outperform rating on the stock and a 144p price target, posted research during the period of suspension which suggested a return to 55p was justifiable on the resumption of trading.
It notes the deal could not have happened without sanction from Premier’s lenders, providing some comfort on the balance sheet. The deal is also expected to boost lending covenants.