Circle Oil considers debt restructuring and/or equity raise by end of 1Q16
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On 29 September 2015 Circle Oil [LON:COP] announced its interim financial results, noting that it had reached agreement in principle with International Finance Corporation ('IFC') to extend its Reserve Based Lending (' RBL') facility by one year to June 2019.
Since that date, discussions have continued with a view to finalising the relevant documentation with IFC. However to date, although progress is being made, the process has not progressed as quickly as envisaged.
Despite Circle's low cost operations, trading remains very challenging due to a further weakening of global oil prices, varying production levels in NW Gemsa and the impact of macro events on payments from EGPC. As a result, and in conjunction with both the RBL extension and the December 2015 redetermination, discussions are ongoing regarding the borrowing base of the RBL facility under which USD 57.5m is currently drawn.
Following the redetermination the Company expect the borrowing base to be reduced and as a result there will be a moderate shortfall, although both parties are actively engaged in constructive dialogue to find a solution.
In light of the above, Circle is considering a number of options including a debt restructuring and/or an equity raise to right-size the balance sheet and ensure that the Company has sufficient cash flows to fund operations. The Board is working towards implementing any such transaction(s) by the end of the first quarter of 2016.
A further update will be provided in due course.