Twin Butte Faces Default After Failed Vote to Approve Sale

  • Company’s forbearance agreement on line of credit terminated
  • Lenders now have right to appoint a receiver to sell assets

Twin Butte Energy Ltd. faces default on its credit line after a group of dissident bondholders succeeded in blocking the company’s plans to sell itself.

The company’s forbearance agreement with its bank syndicate was terminated after it failed to secure sale approval from stakeholders voting at a special meeting Monday in Calgary, according to a statement. Twin Butte’s lenders now have the right to accelerate repayment on the company’s C$85 million ($65.3 million) credit facility and to appoint a receiver to sell the assets.

About 32 percent of bondholders and 76 percent of shareholders voted to approve the sale to a group consisting of Hong Kong and Canadian-domiciled Reignwood Group Co. and Horizon Holding Group, according to the statement. Twin Butte needed at least two-thirds of stakeholders from both groups to approve the sale.

The company faced opposition from some of its convertible-debt holders after it agreed in June to sell itself in a deal that would given equity holders C$22.4 million ($17.2 million), while the convertible-debt holders would have received C$12 million. The bondholders proposed a debt-for-equity swap that would have given them a higher payout, but it was rejected by Reignwood.

Urged Support

The Calgary-based oil and gas producer urged stakeholders to support the plan in an Aug. 25 statement, saying that the dissident group could put the company into default on its credit line if it achieved its goal of blocking the deal.

Rob Wollmann, Twin Butte’s chief executive officer, didn’t respond to requests for comment on Monday.

Peters & Co., one of the advisers on the deal, provided a fairness opinion and recommended that shareholders approve, but it had no explicit recommendation for bondholders. Canaccord Genuity Group Inc., hired by Twin Butte as a financial adviser, also provided a fairness opinion and said it was fair to bondholders.

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