High Arctic Energy aims to restructure outstanding debt into equity

By Devika Patel

Knoxville, Tenn., March 26 - High Arctic Energy Services Inc. said it is contemplating a restructuring plan to convert some of its debt into equity.

The company aims to reduce debt levels and to meet the conditions imposed by its senior creditors for an extension of the credit facilities.

As part of its restructuring proposal, High Arctic and a group holding $23 million of the company's $27.9 million in subordinated convertible debentures have conditionally agreed to convert the debentures' principal and interest into common shares at $0.25 per share.

The company also signed an agreement with Jed Wood and J.M. Wood Investments Ltd. to settle their outstanding claims and lawsuits at a value of $8.2 million in exchange for common shares at that same price.

The agreements are conditional on a number of requirements, including the satisfactory completion of the larger restructuring plan and an extension of the senior credit facility's term for at least one year. These conditions must be met by April 30, but the date may be extended to June 30 under certain conditions.

"We are encouraged by the favorable reaction from those two large creditors and remain optimistic on the prospects for a successful restructuring," chairman of the board Michael Binnion said in a press release. "Much work remains to gain the support of the remaining debenture holders and to negotiate a new senior credit facility, but our stakeholders remain supportive."

High Arctic is a Red Deer, Alta.-based provider of specialized oilfield equipment and services.

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