IGas sells $8 million bonds at 75, fills liquidity needs until March

By Susanna Moon

Chicago, Nov. 3 – IGas Energy plc said it no longer expects to breach its daily liquidity covenant after the sale of $8 million principal amount of secured bonds at a price of 75% of par for cash proceeds of $6 million.

IGas now expects to be in compliance with its daily liquidity covenant until March 2017, when the next amortization and interest payment is due for the secured bonds, according to a company update.

Proceeds from the sale of the secured bonds also will be used for general corporate purposes.

The transaction was exchanged and completed Thursday.

As previously announced, the company also forecasts non-compliance with its leverage covenants as of Dec. 31. If there is a breach of either leverage covenant, an equity cure provision exists within the bond agreements, so that a breach can be cured within 25 business days of the delivery of the compliance certificate for that period. For the period ending Dec. 31, the compliance certificate must be delivered by April 30, 2017 and the latest date for any equity cure would be early June 2017, the company said.

The board is continuing talks with key stakeholders concurrently with a number of strategic investors, to assess options for a sustainable capital structure in the current oil price environment, the company added.

IGas said on Oct. 26 that holders of its unsecured bonds approved a temporary waiver from compliance with its daily liquidity covenant, but holders of its secured bonds rejected the waiver at the meetings.

The company had said on Sept. 30 that it expected to breach the daily liquidity covenant in the second half of October and that it was exploring a number of options including the temporary waiver.

The issuer previously said it has “significant cash resources” of $27.5 million as of Oct. 25, down from $27.6 million as of Sept. 27, and $21.1 million par amount of its own bonds and “expects to be able to continue to meet its ordinary course financing and trading obligations.”

IGas is a London-based onshore hydrocarbon producer, delivering natural gas and crude oil to Britain’s energy market.

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