12th Oct 2016 07:47
LONDON (Alliance News) - IGas Energy PLC on Wednesday said it has summoned its bondholders to request that the company's daily liquidity covenant is removed and to begin formal discussions to agree on a more sustainable, longer term solution.
IGas shares were down 12% to 12.35 pence per share on Wednesday morning.
IGas warned at the end of September that there was a risk that it would not meet its bond covenants in the second half of 2016 and said talks with bondholders were continuing, admitting that there would be a "significant loss of value" without a mutual agreement being signed.
On Wednesday, IGas said it has "issued bond summons to seek a temporary waiver of its daily liquidity covenant and to amend certain notice provisions for bondholder meetings and allow a written resolution procedure."
The temporary waiver, IGas said, is intended to "provide a platform for discussions with the company's stakeholders in order to reach an agreement on a sustainable capital structure for the group."
IGas said it is continuing to pursue other options to maintain compliance with its liquidity covenant, including the sale of bonds or other assets or entering into a pre-paid swap of its oil production in 2017.
"At the same time, IGas continues to pursue discussions with a number of strategic investors and is evaluating options for cash and earnings accretive transactions, including farm-outs and other asset portfolio management opportunities to improve its cash position and de-leverage its balance sheet to achieve a capital structure that is sustainable in the current oil price environment, as well as enabling the Company to capitalise on value accretive opportunities," said the company.
IGas will meet bondholders on October 26 and, if the waiver can be agreed, it will become effective immediately afterwards.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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