20th May 2016 06:36
LONDON (Alliance News) - Circle Oil PLC on Friday said the company's huge debt pile means the result of its ongoing strategic review is likely to lead to "little or no value" for its shareholders and said it is attempting to conclude the review as soon as possible.
Circle Oil is relying on the support from its creditors as its cashflows are under significant pressure, partly because the company needs a more stable and consistent payment system from Egypt's state-owned oil company, which purchases the London-listed oil company's production.
The company launched a strategic review and is considering all options, and the most recent extension to its debt expires on May 27, leaving shareholders concerned whether the lender, International Finance Corp, will provide a further extension if needed.
On Friday, Circle Oil said there is likely to be little or no value for its shareholders because of the amount of debt it has.
The company has USD77.5 million worth of outstanding debt - a considerable sum for a company with a market capitalisation of around GBP11.3 million. That debt is split between a USD20.0 million convertible loan held by KGL Investment Co and the USD57.5 million reserve based lending facility from IFC.
"After taking into account the company's USD77.5 million outstanding debt position [...] and based on the indicative proposals received to date, it is likely that there will be little or no value attributed to Circle Oil PLC equity holders," said Circle Oil.
"To date the company has received a number of indicative proposals, which are in the process of being evaluated, and is working to conclude the Strategic Review Process as expediently as possible," the company added.
Circle Oil reiterated it is looking at all the options available, including the potential to merge or sell the company, restructure its debt or possibly conducting a subscription for new shares in the company.
By Joshua Warner; [email protected]; @JoshAlliance
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