(Alliance News) - G3 Exploration Ltd is confident it will be able to repay bondholders, it said on Wednesday, amid continued balance sheet issues.
G3 said Nordic Trustee, the trustee for G3's 10% senior secured callable bonds, has called a meeting with other bond holders to update them on the bond's status.
Nordic Trustee will also allow the receivers of G3 subsidiary Greka Gas China Ltd to update bondholders on the restructuring.
In February, coal bed methane firm G3 declared a dividend in specie, which will give its shareholders a direct interest in subsidiary Green Dragon Gas, which holds all of G3's assets.
"We believe the intended dividend in specie, which was announced earlier this year, continues to be the most attractive route to unlocking the potential of G3. Today's announcement demonstrates we are continuing to seek a solution which will satisfy bondholders and unlock the remaining potential for G3 shareholders," said G3 Executive Chair Randeep Grewal.
"Part of the rationale for the dividend in specie is to enable the current balance sheet constraints to be resolved and in order to proceed we must gain approval from the bondholders who put up capital for the development of the now producing assets."
G3 also said Green Dragon Gas is working to place a reserve-based loan which would enable it to repay G3 some of an existing USD270 million inter-company loan, which would then allow G3 to repay bondholders.
"The reserve-based loan placement will enable the repayment of the outstanding debt to our bondholders and therefore an opportunity to favourably satisfy our balance sheet objectives. The dividend in specie will then enable G3 to focus on its core specialty of exploration and appraisal whilst shareholders can choose to retain exposure to the now producing assets."
G3 shares were 13% lower on Wednesday afternoon in London at 28.00 pence each.
By George Collard; georgecollard@alliancenews.com
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G3 Exploration (G3E)