14th Jul 2016 07:25
LONDON (Alliance News) - Circle Oil PLC was thrown a lifeline on Thursday after the company's lender agreed to give the company more time to make the repayments due under its reserve-based lending facility so the business can raise funds before the end of this month.
Circle Oil had already said it would raise funds in July and conceded that there is little chance that shareholders will realise any value from their investment in the company.
Circle Oil launched a strategic review of the business back in March as it attempted to find a way to repay its overdue debt and assessed the opportunity of selling or merging the business with another, but the company has so far failed to find a way to address its deteriorating position.
International Finance Corp has provided some extensions to the company and has indicated it may provide a further one once the current expiration date on August 5 expires.
Circle Oil said there has not been a "sustained improvement" to the company's payments that it receives from the state-owned oil company in Egypt, which has been one of the root causes of the company's problems, and said they continue to be "unpredictable".
"As a result, the company continues to explore options for additional funding during the course of July in order to be able to discharge its financial obligations from August 2016," said the company Thursday.
Circle Oil has not revealed what funding options it is considering.
Circle shares were up 6.8% to 0.668 pence per share on Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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