2nd Nov 2015 08:32
LONDON (Alliance News) - Caza Oil & Gas Inc on Monday said it has secured another extension to its financing arrangement with Apollo Investment Corp, as the company continues to be in breach of the covenants of the deal.
Caza said Apollo has executed a Forbearance and Reservation of Rights Agreement under which it has restrained from executing its rights under its lending agreement with Caza, after the AIM-listed oil and gas company failed to meet the covenants on the agreement ahead of previous deadlines.
The agreement had previously been extended to October 31 but has now been pushed on to November 30.
Caza had said it remains focused on securing new financing or a refinancing which will allow it to retire its debt to Apollo and which will provide it with sufficient funds to continue developing its Bone Spring play in the US. It has been considering all debt and equity financing options and asset sales with a view to achieving this.
The company said, as highlighted in its second quarter results in August, that is is in advanced talks with a potential financier and said those talks have progressed, though it said that given the number of conditions that would have to be met to secure new financing, there is no certainty that any deal will be sealed on acceptable terms.
It also said there remains a risk that Apollo will stop restraining itself from exercising its options under the lending agreement.
Should a new financing deal be secured, the company said it is likely to be an equity investment in the company which, given the current commodity price environment, would likely result in a significant dilution for the company's existing shareholders.
Caza shares were down 33% to 0.316 pence on Monday morning, one of the worst performers in the AIM All-Share.
By Sam Unsted; [email protected]; @SamUAtAlliance
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