U.S-based oil and gas producer Chaparral Energy Inc. has reached a temporary agreement with lenders, buying it additional time to complete negotiations.
As per a regulatory filing, Chaparral stated that it had reached a forbearance agreement with senior bond holders and other lenders who agreed to not exercise their right to call the notes at least until 15 April 2016.
Previously, Chaparral missed an interest payment of $16.5m despite a 30-day grace period after its independent auditors had “substantial doubts” over the company’s ability to continue as a going concern.
Chaparral owed $1.6bn in debt to creditors as of December 2015. The company had drawn another $141m in February, maximizing its credit limit. Cash on the company’s books as of March 2016 was $176m.
U.S-based oil and gas explorer Ultra Petroleum Corp., deferred making an interest payment of approximately $26m on its 6.125% bonds due 2024. The payment was due to creditors on 1 April 2016.
The company, as per its indenture governing the 2024 notes, permits it a grace period of 30 days to make the interest payment.
Failure to either make a payment within the grace period, or obtain a waiver from the bond holders of the 2024 notes would result in a technical default.
Ratings agency Moody’s downgraded Mexican state-owned company Petroleos Mexicanos’ (PEMEX) by two notches from Baa1 to Baa3 with a negative outlook. The downgrade was attributed to lower oil prices, poor financial results and the possibility of the Mexican government providing financial support to the firm, all of which has negatively impacted Pemex.
Previously, Moody’s had downgraded Pemex to Baa1 from A3 in November 2015 and in January 2016, put it on review for a second downgrade.
On the earnings front, Pemex reported 13 consecutive quarterly losses since 2012 and generated losses amounting to $32bn across the FY 2015 period. Debt on the company’s books at the end of December 2015 was c.$8bn.
Further, the company announced in February 2016 that it would trim its 2016 budget by $5.8bn (MXP 100bn) to mitigate losses caused by falling crude oil prices.
Separately, Moody’s also lowered its outlook on the sovereign debt of Mexico (rated A3) amid subdued economic growth in the country. Oil, a key source of revenue for the country, has fallen sharply on lower demand globally, leading to the Finance Ministry of Mexico announcing budget cuts.
Moody’s expects the Mexican government to step in should Pemex face further financial difficulty.
According to sources, U.S.-based private oil and gas firm Chaparral Energy would miss a mandatory 1 April 2016 coupon payment on its $300m bond.
Separately, the company, in its FY 2015 annual filing stated that it may look at the possibility of filing for a Chapter 11 bankruptcy.
Further, Chaparral had, on 1 March 2016, missed a $16.5m interest payment on another bond, kicking off a 30-day grace period.
As per its FY 2015 filing, Chaparral generated a net loss of $1.3bn for the period and had about $1.6bn in debt.
Chaparral drew down the balance on its $548m RCF in February. The lenders will re-determine the credit facility on 1 May 2016, and it expects its borrowing base to decrease significantly.
The company would then repay the outstanding balance within 30 days or in six monthly installments.
U.S-bases energy firm Sandridge Energy, in a regulatory filing, considered the possibility of filing for a Chapter 11 bankruptcy on being negatively impacted by falling energy prices.
The company is actively looking to restructure its debt of $3.6bn by hiring law firm Kirkland & Ellis and investment bank Houlihan Lokey.
Mining firm Anglo American’s subsidiary Anglo American Capital plc plans to re-purchase upto $1.3bn of its bonds from investors as part of its turnaround plan aimed at reducing debt and divesting certain assets.
The company published a tender offer on 18 February 2016 to purchase debt which ends on 16 March 2016.
The plan to puchase debt comes on the news of Moodys’ downgrading the company’s credit ratings to Ba3 from Baa3 on 15 February 2016, ahead of its FY 2015 results announced a day later. S&P also downgraded the company’s credit rating to BB from BBB-.
Key takeaways from the FY 2015 earnings release:
- Revenue of $23bn vs. $30.9bn a year ago
- Net loss before tax of $5.5bn vs. loss of $259m a year ago
- EBIT at $2.2bn vs. $4.9bn a year ago
- EBITDA at $4.8bn vs. $7.8bn a year ago
Targets for 2016:
- $3-4bn of asset disposals targeted
- pro-forma net debt to decline below $10bn by 2016 and to touch $6bn in the medium-term
- Net Leverage to be less than 2.5x in the medium-term
- Suspension of dividend payments
- Capex for 2016 of less than $3bn
Bonds to be purchased include EUR, GBP and USD -denominated bonds with the following maturities:
- 4.375% bonds due December 2016
- 1.75% bonds due November 2017
- 1.75% bonds due May 2018
- 6.875% bonds due April 2018
- 2.5% bonds due September 2018
- 2.625% USD bonds due 2017
Sources: Company Press Releases, PR Newswire, Bloomberg & FT
Headquartered in Madrid, Spain, Deoleo S.A. is company engaged in the manufacturing, processing and marketing of bottled olive oil, vinegars, sauces and other food products. Major brands of the company include Bertolli, Carbonell, Carapelli, Sasso, Koipe, Sensat, Figaro and Friol.
On 13 June 2014, CVC Capital Partners acquired a 29.99% stake in Deoleo by offering €0.38 per share and on 30 December 2014, secured an additional 18.1% stake, taking its total stake in Deoleo to 48.1%. Currently, CVC holds a 50% stake in the company.
3Q’15 Trading Update:
- Deoleo’s sales for 9M’15 period rose 11.8% y/y to €628.7m on account rising prices of olive oil across Italy and Spain, despite a poor harvesting season where crop output was hampered by unfavourable weather conditions. Rising prices were attributed to a poor harvesting season in Europe, primarily in Spain and Italy.
- EBITDA declined sharply by 46.9% y/y to €31.8m.
- With €24m drawn under its €85m Sr.Sec Revolver, the leverage covenant kicks in if more that 40% or €35m is drawn.
- Net financial debt as on 30 September 2015 was €524m and LTM Net leverage was 9.8x.
For further reading, a short snippet is provided in the attached excel.
Attached file: Deoleo S.A.