Shares in North Sea oil company Xcite Energy (XEL:AIM) are suspended as bondholders reject a financial restructuring of the company. The stock fell 23.75% to 1.3p just before the suspension took effect at lunchtime today.
With the liquidators being called in it now looks unlikely existing shareholders will get anything back.
Xcite drilled a successful appraisal well on the Bentley heavy oil field in 2008. Having struggled to find a partner to meet the costs of developing the asset it launched a $135m bond issue in June 2014.
These bonds, secured against its asset base, matured in June of this year but Xcite was forced to look for an extension as it did not have sufficient funds to repay creditors.
Investors had mobilised against the rescue plan which would have seen them face 98.5% dilution in the event it went through.
Ian McLelland, global head, natural resources of Edison Investment Research, says: 'Following the previously announced debt-for-equity swap, Xcite's existing shareholders were always going to lose almost everything, retaining only 1.5% of the equity value in the event the deal went through. Xcite's bondholders, however, had a choice and appear to have gone down the route of cutting their losses rather than taking control of the company.
‘This is a big blow for everyone, and suggests that management could not broker a deal to sell its prized Bentley asset at pretty much any reasonable price. Timing could not have been worse for the UK, as the newly independent Oil & Gas Authority (OGA) attempts to drive the industry towards Maximum Economic Recovery (MER).
‘The Bentley field was one of OGA's strategic priorities when it was formed, now its future is more uncertain than ever.’
