Lenders take control of Clough’s Twinza Oil

An oil company started by prominent WA businessman Bill Clough will undertake a debt for equity swap, handing control to a Hong Kong hedge fund.

Perth business identity Bill Clough is set to lose control of the energy company he founded, Twinza Oil.

Prominent Perth business identity Bill Clough is set to lose control of the energy company he founded, Twinza Oil, with its major lender executing a debt for equity swap with plans to develop its flagship Pasca oil field in Papua New Guinea.

Mr Clough’s McRae Investments, the diversified company established by his father Harold Clough in 1965, owns nearly 43 per cent of Twinza but is set to be heavily diluted as part of the swap deal underway.

The company has buckled under $US300m of senior debt which has matured and the swap deal, struck through a scheme of arrangement, will allow Twinza to progress developing the offshore Pasca field with a target of 20,000 barrels a day of production.

Twinza’s long-term funding partner, the $2bn Hong Kong hedge fund Tor Investment Management, will control the bulk of the company’s shares along with other senior lenders.

Other major investors facing dilution include private equity firm Kerogen Capital which holds a 27 per cent stake, while long-time investor and skincare entrepreneur Carl le Souef still owns a 8 per cent share of the company.

Kerogen executive Julian Ball sits on Twinza’s board as a non-executive director, while Mr Clough is an alternative director.

Tor first kicked in $US15m in 2018 as part of a $US55m syndicated loan facility used to fund the Pasca A4 appraisal program.

After a $1.3m equity raising in 2020, funding from shareholders came to a halt. It’s understood shareholders contributed a total of $68.3m between June 2007 and October 2020.

Tor has been the sole source of capital for Twinza with funds used for all company expenses, including salaries.

“This is an important step towards cleaning up Twinza’s capital structure, to allow for future fundraising including project financing,” a Tor spokesman said.

“While the various stakeholders solve this through the Australian court system, it will be business as usual for management, who are laser focused on progressing front end engineering and design and have our full support and confidence. Our number one priority is ensuring this project is developed in a timely fashion for the benefit of the PNG people and our investors, and this is a necessary step to achieve that goal.”

Tor expects the scheme to take between three and six months to complete, with engineering work on Pasca to continue through the process. Twinza will then look to secure final licensing and project financing as part of the development.

The final equity shares of Twinza will be determined following a third party independent valuation as part of the court-run scheme process.

Twinza sold up to 50 per cent of the Pasca asset to PNG’s Mineral Resources Development Company last year and in December struck a gas agreement with the local government.

Twinza’s executive chairman Stephen Quantrill, a former executive chairman of Harold Clough’s McRae Investments, took over the top board role from former Oil Search executive Ian Munro in September 2021.

Originally published as Lenders take control of Clough’s Twinza Oil