Energy Companies Buy Time by Paying Debt Interest With More Debt
- Holders are offered PIK notes, common stock to cut debt
- Oil and coal companies need breathing room as credit shrinks
W&T Offshore Inc., struggling with dozens of drillers, producers and miners to ride out the energy industry’s prolonged slump, offered to give its bondholders a 45 percent stake in the company plus new debt that’s allowed to skip cash payments.
Owners of W&T’s $900 million of 8.5 percent senior notes due 2019 can swap them for as much as 62.1 million shares of common stock, $202.5 million of second-lien notes due 2020 and $180 million of unsecured notes due 2021, the Houston-based oil explorer said Monday in a filing. The so-called pay-in-kind toggle notes can pay interest by issuing more debt securities, rather than cash. Separately, Foresight Energy LP set terms on its own debt swap today that could help the coal-mining company adjust to depressed prices.