15th Mar 2016 11:18
LONDON (Alliance News) - Circle Oil PLC on Tuesday said it has begun a formal strategic review of its business and assets, and is "considering all options" including a possible sale to maximise value for shareholders.
The oil and gas exploration and development company said it has been considering a number of options to reduce its debt and ensure it has sufficient cash flows to fund future operations. It has appointed Investec Bank PLC to act as its financial adviser in relation to the review.
As it disclosed early last month, Circle Oil's cash flow and financial position are under significant pressure, primarily due to the irregularity of dollar receipts from Egypt's national oil company.
Given the continuing oil price volatility, it has agreed a deal with the International Finance Corp for any repayments due under its Reserve Based Lending facility to be suspended until April 15. The facility is currently drawn to USD57.5 million. The IFC, which is the World Bank's private sector lender, has indicated it is willing to consider further waivers as may be required to continue the strategic review process, Circle said.
"The agreement we have reached with IFC to defer the December 2015 redetermination and to provide a waiver in relation to any immediate repayments is a welcome development and one which gives us the headroom to progress the Strategic Review and to put in place a sustainable long term financing structure for the business," said Chief Executive Officer Mitch Flegg in a statement.
"Circle has excellent assets across our regions of operation and our aim, mindful of the sustained low oil price environment and the company's stressed financial position is to maximise the value from these assets for the benefit of all stakeholders," added Flegg.
Shares in Circle Oil were down 14% at 2.25 pence Tuesday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
InvestecCircle Oil Plc