[Editor’s note: This story was updated at 2:30 p.m. CT Dec. 16.]

Premier Oil Plc will be renamed Harbour Energy Plc after a reverse takeover by private equity-backed Chrysaor Holdings Ltd. due to complete in the first quarter of 2021, Premier said on Dec. 16.

Struggling to deal with heavy debt after its profits were slashed by a drop in oil prices during COVID-19 lockdowns, Premier struck a deal with Chrysaor in October to create the British North Sea's largest oil and gas producer.

Premier's shareholders will vote on the transaction on Jan. 12. Chrysaor shareholders, primarily private equity firm Harbour and Singapore's GIC, will own up to 77% of the new firm.

Creditors of Premier, which has net debt of $1.9 billion and a market capitalization of $284 million, will receive $1.2 billion in cash under the merger and debt restructuring plan from a new debt facility and existing cash from both groups.

This on average represents a payout of around 61 cents for each dollar owed, the prospectus said. They can also elect to receive further shares representing up to 18% of the new group, or a cash alternative bringing the payout to around 75 cents.

Existing Premier shareholders will hold around 5.5% of the new company.

Premier CEO Tony Durrant has stepped down from the board as part of the merger transition, with finance director Richard Rose taking over as interim CEO on Jan. 1.

Once the merger is complete, Linda Cook will become Harbour Energy CEO and Blair Thomas chairman of the group, which is expected to produce 200,000-220,000 boe/d next year.

The prospectus said the combined group is seen generating enough free cash flow to support shareholder returns, and a sustainable dividend is expected to be introduced with respect to the financial year to Dec. 2021.

Chrysaor has hedged about 67% of its first-half 2021 oil output at an average $60/bbl, and over 70% of its gas volumes.

Premier's takeover could herald wider consolidation but the pool of buyers is small in a sector with an uncertain outlook, with many leading energy companies looking to sell large parts of their portfolios as they shift towards renewable energy.