LONDON (Alliance News) - Shares in Nighthawk Energy PLC plunged on Friday as it said it had defaulted on a loan with assets now possibly subject to foreclosure or "other recourse".
Nighthawk's shares were trading at 0.119 pence each on Friday morning, down 66%.
In December, the oil firm agreed with creditor Commonwealth Bank of Australia to amend the maturity date on its loan to June. In October, the bank had agreed to a waiver related to a minimum production breach by Nighthawk.
In January, Nighthawk then engaged investment banking firm SSG Advisors LLC to seek options for restructuring its debt obligations to CBA.
On Friday, the company said SSG has completed the solicitation phase of the restructuring process, but so far, the only proposals it has come up with are to directly buy Nighthawk's assets at a value below the principal of its loan from CBA.
Ten days ago, Nighthawk said it signed a non-binding letter of intent with a party identified by SSG for a possible sale of its assets prior to June.
On Thursday, it received a notice of default from CBA after Wednesday's deadline for a definitive agreement of a sale or restructuring, and as a result Nighthawk said it is subject to possible remedial action by the bank which could include the foreclosure or other options for its assets.
Nighthawk believes CBA "will continue to allow the company to pursue in good faith" its plans to restructure or sell assets before June to stave off the default.
It said an asset sale would most likely occur through a series of bankruptcy filings, meaning shareholders would not receive any "residual value".
Nighthawk also said it is in talks with shareholders of a possible "alternative proposal" for restructuring the CBA loan and recapitalising the company.
It continues to meet all operating and financial obligations, it concluded, "in a timely manner" and its current cash position is around USD1.0 million, which is enough to allow it to maintain its current operating level save for the repayment of the CBA loan principal.