From the Financial Times today 28th June28 Jun 2021 18:36
Hurricane Energy, the oil and gas producer once considered a bright hope for the UK North Sea, has failed to push through a controversial financial restructuring that would have virtually wiped out its shareholders.
The UK’s High Court ruled on Monday it would not sanction the plan, which would have handed control to Hurricane’s bondholders in exchange for forgiving $50m of debt and extending the maturity date on a further $180m of bonds due to be repaid in July next year.
The plan had been extremely unpopular with shareholders, including activist fund Crystal Amber, Hurricane’s second-largest investor with a stake of more than 11 per cent.
However, management led by chief executive Antony Maris had argued it was a “necessary step” to secure Hurricane’s future following production disappointments, warning it would not be in a position to repay its $230m of bonds next year.
The Aim-listed company had hoped to open a new frontier in UK waters by producing oil from “fractured basement” rock formations — naturally occurring fissures in the granite that lies below the softer sandstone from which most other North Sea hydrocarbons are extracted.
However, Hurricane admitted last year that it was unable to sustain intended production rates from its flagship Lancaster field west of the Shetland Islands and parted ways with its founder and former chief executive Robert Trice.
A hearing on the proposed restructuring, which would have left shareholders with just 5 per cent of the company’s equity, was held at the High Court last week.
In a lengthy judgment handed down on Monday, Mr Justice Zacaroli said “despite the fact that there is projected to be a shortfall between available cash and the sum required to redeem the bonds at maturity”, there was a “reasonable possibility?.?.?. it could be bridged”.
He added there was “no other sufficient ground of urgency” for the bonds to be restructured now.
Hurricane said it was “considering all options, including an appeal”, and warned that bondholders had “certain rights under the terms of the convertible bonds that, if enforced, could result in an acceleration of the convertible bonds and ultimately an insolvent liquidation of the company”.
Crystal Amber has proposed to remove Hurricane Energy’s chair and non-executive directors and replace them with two of its own candidates at an extraordinary general meeting on July 5, although several directors are already up for re-election at the company’s annual meeting on Wednesday.
Hurricane said: “It is the company’s understanding that, in the event all of the executive directors are removed from the board, the company’s nominated adviser is likely to resign with immediate effect.”
It said this was likely to result in its shares being suspended from trading, “and, if a replacement nominated adviser is not in place within a period of one month, it may result in the shares of the company being delisted from Aim”
Sign In
Follow the stocks
