Connacher Oil & Gas Lenders Sue Claiming Loan DefaultErik Larson and Ari Altstedter
Connacher Oil & Gas Ltd. was sued by lenders in New York over claims that the Canadian energy company defaulted on a $128.4 million term loan in February.
The lawsuit comes as Calgary-based Connacher is seeking approval for a plan to swap its C$1 billion ($800 million) in bonds for new equity after collapsing oil prices cut cash flows. The recapitalization would cut interest payments by C$80 million, the firm said in a Jan. 30 statement.
With crude oil prices half what they were last year, Canadian producers including Bellatrix Exploration Ltd., Penn West Petroleum Ltd. and Baytex Energy Corp. have been forced to negotiate with creditors to make it through the slump as cash flows dwindle.
Credit Suisse Group AG’s Cayman Islands branch filed the lawsuit Monday in New York state court in Manhattan as administrative agent for a group of unnamed lenders.
Connacher said in an earlier statement that the debt-for-equity swap has the support of about 70 percent of bondholders. The proposal also calls for the company to issue C$35 million in convertible notes and gives it the option to replace its C$30 million revolving credit line with a new term loan.
Chris Bloomer, Connacher’s chief executive officer, didn’t immediately return a call seeking comment on the New York lawsuit.
The case is Credit Suisse AG v. Connacher Oil & Gas Ltd., 650806/2015, New York State Supreme Court, New York County (Manhattan).