Penn West warns it may default on debt; stock tumbles

Canada-based oil and gas producer Penn West Petroleum Ltd. warned it could be in violation of its lending agreements by the end of June 2016, leading to its shares losing a quarter of its value in Monday’s trade.

The company said that it had hired investment banking firm Rothschild of New York and accounting firm PWC of Calgary as advisers as it negotiated with its lending syndicate to ease conditions that could result in default if not met by 30 June 2016.

A default would allow the lenders to demand immediate repayment.

Penn West stock fell as low as $0.78 per share on Monday morning, down 26 per cent from its close of $1.05 on Friday. A year ago, Penn West stock was trading over $3 a share.

With debt of $1.87bn as of 31 March 2016, the company is required to maintain covenants on its senior debt and total debt to adjusted earnings. But depressed oil prices have led to a steep fall in earnings as compared to its debt.

Source:  The Star

 

Pacific Exploration receives $830m bid from EIG

Pacific Exploration received a $830m bid from private equity firm EIG Global Energy Partners, which argues that its bid was superior to the one selected last month by the company’s board.

The bid comes ahead of its restructuring-related court hearing on Tuesday in Canada.

Previously, the company’s board selected a bid submitted by Catalyst Capital Group, which had support from debt holders holding more than 75% of the company’s debt.

EIG’s new bid was considered to be superior to Catalyst’s offer, according to the company’s CEO R. Blair Thomas.

Washington-based EIG argued in its letter that the total creditor recovery of $830m in its new bid was 67% higher than the Catalyst offer and the implied enterprise value of $1.53bn was 39% higher too.

The $300m in sponsor equity contributed to the company was 20% higher in the new bid than what Catalyst proposed, the letter said. The $550m in total cash contributed to the company was also 10% higher than Catalyst’s. EIG said the binding offer will expire May 31.

Source:  Globe and Mail