5th Aug 2016 16:11
LONDON (Alliance News) - Circle Oil PLC late Friday said its lender has granted another repayment extension regarding the company's outstanding debt, and has also given the business more time to make the associated interest payments.
Circle Oil's lender, International Finance Corp, threw the company a lifeline in July by agreeing to give the company more time to make the repayments due under its reserve-based lending facility so the business could raise funds.
Circle Oil had previously said it was going to raise funds last month when it conceded that there is little chance that shareholders will realise any value from their investment in the company.
However, those funds have not been raised and Circle Oil continues with the strategic review of the business that was originally launched back in August. The main problem for the company is cashflow, as large amounts of payments are owed to the business from the state-owned oil company in Egypt.
The lender has now granted a further extension until September 2 and again said it would consider further extensions. The interest payment that was due toward the end of July, which has unsurprisingly not been paid, has also been extended until the same date.
Importantly, Circle Oil said a condition of the extension is that the interest owed will be repaid if the company receives "significantly better than anticipated amounts" from the Egyptian General Petroleum Corp, with no specific details being published.
"The company's financial position remains under significant pressure. US dollar payments from Egyptian General Petroleum Corp have continued to be unpredictable and to date there has not been a sustained improvement in the cash flow profile of the company," said Circle Oil.
"However, as a result of the deferral of this payment, the company is in a position to discharge its financial obligations during the period of the waiver and will continue to explore options for additional funding during this period in order to be able to discharge its financial obligations thereafter," the company added.
Circle Oil shares are suspended.
By Joshua Warner; [email protected]; @JoshAlliance
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