Connacher Oil and Gas Ltd., a Canadian energy producer grappling with high debt, won an Alberta court’s approval for a plan to reduce interest payments as it seeks to withstand the crude price collapse.
Connacher won the consent Thursday after altering a restructuring proposal to appease lenders. The restructuring lets Connacher convert roughly C$1 billion ($823 million) of bonds into shares, to save about C$80 million a year of interest. The plan also includes the issuance of $35 million of new convertible notes and a C$30 million increase to its term loan.
Small oil-sands developers including Connacher are fighting for survival with crude trading at just over half its value from June amid a global glut. After Connacher revised the plan, Credit Suisse Group AG, representing first-lien lenders, agreed to end its attempt to force Connacher to immediately repay a $128 million loan.
“It improves the balance sheet, gets us aligned with new partners and positions us to ride this out and become a stronger company,” Chris Bloomer, Connacher’s chief executive officer, said in a phone interview. “The current prices aren’t something we want to live with for a long time but they are getting stronger. That, coupled with our cost reductions, improves our outlook. We’re going to be around for awhile.”
The company plans to complete the restructuring by May 8, Bloomer said.