Xcite Energy provides an update on the restructuring of its senior secured bonds issued by Xcite Energy Resources.
The company announced in its annual results that it has been in discussions with its principal bondholders over a potential restructuring of the bonds. On 16 June, the company announced an extension of the maturity of the bonds until 30 September in order to continue those discussions.
On 12 September, the company subsequently announced that in light of its discussions with bondholders, it believed that there would be a minimal residual equity stake attributed to the company's existing shareholders following the restructuring.
Negotiations are being concluded between the principal bondholders and the Company to finalise the details of the restructuring, but the company expects that, subject to shareholder approval, the restructuring will comprise 100% of the value of the outstanding bonds (approximately US$149 million) being exchanged for 98.5% of the enlarged issued share capital of the company, through the issue of additional shares in the company.
The company is also in discussions with principal bondholders in relation to the provision of a working capital facility of up to US$10 million, which remains subject to finalisation of terms and documentation.
The proposed restructuring will provide the company with a significantly stronger balance sheet and the working capital to continue to pursue the development of the Bentley field in order to deliver value for all stakeholders in the future.
The directors of the company recognise that the proposed restructuring represents a very significant dilution to existing shareholders, however they believe that it is in the best interests of the company and, as a result, intend to call an extraordinary general meeting of shareholders to consider and vote upon the proposed restructuring.
A circular to shareholders will be issued as soon as practicable, containing an explanation of, and rationale for, the proposed restructuring, including the likely consequences for shareholders and the company should the proposed restructuring not be supported at the shareholder EGM.
The directors understand that should shareholders not support the Proposed Restructuring at the Shareholder EGM, the Bondholders intend to pursue enforcement action against the Company. On the basis of advice received by the Company and the directors, the directors believe that such enforcement action is unlikely to result in the return of any value to the Company's existing shareholders. In order to conclude discussions with Bondholders and to hold the Shareholder EGM, the Company has requested a further short-term extension to the maturity date of the Bonds to the earlier of (i) 31 October 2016; or (ii) immediate demand by the bond trustee (acting on the instructions of Bondholders).
The summons to Bondholders in relation to the further extension of the Bonds' maturity date can be found on the Xcite Energy Resources plc section of the Company's website www.xcite-energy.com.
At 2:27pm: (LON:XEL) Xcite Energy Ltd share price was -0.27p at 1.86p