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Hurricane Energy (HUR) Shares Are Up 37.8% Over the Past Week on Bonds Buyback

Simon Mugo trader
Updated 14 Sep 2021

Shares of Hurricane Energy PLC (LON: HUR) are up 37.8% over the past week after announcing that it had accepted to buy back bonds worth $77,984,000 out of the total outstanding bonds worth $230 million.

The bonds repurchase transaction is set to be completed tomorrow, after which the remaining outstanding bonds will be worth $152,016,000 in principal amount. The off-shore oil company noted that it had saved approximately $22 million in future obligations by repurchasing the bonds.

Hurricane Energy is still in financial trouble following the downgrading of potential oil reserves at its main Lancaster oil field in the UK North Sea. However, the oil company is working hard to establish a solid financial position despite its financial challenges.

The repurchase transactions were a success for the company. The bonds were repurchased for 78% of the principal amount, with the bondholders also receiving the accrued interest payments due on the offered bonds.

However, some bondholders did not take the company up on its offer, which is a clear indicator that they are willing to wait for the bonds to mature or for Hurricane’s management to offer them better terms in the future.

Bondholders are generally regarded as the smart money primarily because they are mainly institutions. It appears that they are betting on Hurricane’s future recovery, which fueled the stock’s recent rally.

Antony Maris, Hurricane Energy’s CEO, commented: “I am pleased that the Company has been able to buy back more than 33 per cent of the outstanding bonds. This will reduce the par value of bonds held by third parties to $152 million, utilising $62 million of net free cash (inclusive of accrued interest).”

Nobody can predict the future with any degree of certainty, but Hurricane Energy’s future seems brighter now than it was a month ago.

*This is not investment advice.

Hurricane Energy share price.

IG chart of Hurricane Energy share price 14-09-2021

Hurricane Energy shares are up 37.75% over the past week after offering to buy back outstanding bonds. After the initial bond repurchase offer, Hurricane Energy shares fell, before closing the day over 6% higher.

Should you invest in Hurricane Energy shares?

Hurricane Energy shares are traded on the London stock exchange's AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are Hurricane Energy shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading