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Shares of Hurricane Energy PLC (LON: HUR) crashed 49.3% after announcing a financial restructuring proposal to deleverage its balance sheet and boost its liquidity position materially.
The proposal marks a significant step for the company as its creditors take over in a debt-to-equity swap that will convert $50 million of its debt into shares.
Hurricane has agreed with creditors who own bonds worth $230 million due July 2022. The maturity of the remaining debt has been postponed to December 2024.
The company is fighting to remain afloat after slashing the resource estimates at its flagship Lancaster oil field and plunging into a period of uncertainty.
Today’s announcement marks the start of a new phase for the company as it works with its creditors to pay off its massive debt load in the face of lower revenue expectations.
Antony Maris, Hurricane’s CEO, said: “Current financial projections show we will not be in a position to repay our convertible bonds at maturity from Lancaster Field cash flows,”
“We acknowledge that this proposed course of action entails significant dilution for our existing shareholders, but it marks an important and necessary step in the company's efforts to secure a viable capital structure.”
Hurricane Energy intends to issue new shares once the restructuring effort has been completed to meet the terms of the deal. The shares shall be subject to a lockup period according to the restructuring terms.
The company’s board has shelved plans to list on London’s primary market given its current financial challenges.
Hurricane Energy share price.
Hurrican Energy shares crashed 49.31% to traded at 1.177p, having fallen from Thursday’s closing price of 2.322p.
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