Lightstream Resources looks to pay down $1.175B debt with stock
Plan could reduce annual interest payments by about $112M
Lightstream Resources says it's been granted preliminary court protection from creditors as it pursues a plan to reduce its debtload by just over $1 billion — a move that would see secured creditors receive 95 per cent of the struggling oil and gas company's equity.
Current shareholders would end up with 2.25 per cent of the equity in a revitalized Lightstream, which has been unable to keep up with its interest payments since the collapse in oil prices that began in late 2014. Unsecured noteholders would get 2.75 per cent.
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The plan outlined by Calgary-based Lightstream would reduce its annual interest payments by about $112 million.
The company had previously warned that it wouldn't be able to make a $41.7-million interest payment on June 15, starting the clock on a 30-day grace period that ends Friday.
The proposal released late Tuesday requires numerous approvals, which include Lightstream's secured and unsecured creditors, its shareholders and Alberta's Court of Queen's Bench. On Wednesday morning, the company said the court had granted a preliminary interim order prohibiting holders of its secured and unsecured notes from declaring it in default or taking other enforcement steps.
It said it will return to court in August to seek permission to hold meetings with stakeholders where they will vote on its recapitalization plan.
Built through acquisitions
Lightstream was built through a string of acquisitions starting in 2009. It boasts a strong base of light oil production in Alberta and Saskatchewan but its debt totalled $1.6 billion at the end of 2015.
The company launched a sales process for its core Bakken light oil producing assets in Saskatchewan in late 2014 but chief executive John Wright said previously it had been unable to find a suitable buyer in a down market.
Lightstream's annual average production in 2015 fell 22 per cent to 31,392 barrels of oil equivalent a day due to asset sales and lower investment in new wells. It reported a net loss of $946 million, including a non-cash writedown of $661 million to account for lower anticipated future commodity prices.
Its shares closed at 20 cents on Tuesday at the Toronto Stock Exchange.
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