Lightstream Has 90 Days to Avoid Default as Borrowing Base Cut

  • Credit facility cut to C$250 million by syndicate of lenders
  • Company must resolve C$121 million shortfall to miss default

Lightstream Resources Ltd. has 90 days to resolve a C$121 million ($96.6 million) shortfall in its credit facility or be declared in default.

The Calgary-based energy exploration and production company had its secured credit facility reduced to C$250 million ($199.5 million) from C$550 million ($439 million), the company said in a statement. It has C$371 million ($296.1 million) outstanding on the facility, including issued letters of credit, it said.

If Lightstream cannot resolve the shortfall within 90 days it will trigger a default. The company said it’s pursuing a range of strategies to rectify the problem, including alternate first lien financing, asset sales and a restructuring, which it aims to have completed or in progress by June 30.

“However, if we are unable to execute on an appropriate strategic transaction in a timely manner, based on current commodity prices, our funds flow from operations is not expected to be sufficient to fund our upcoming junior debt interest payment obligations, the first of which is due June 15, 2016,” according to the statement.

The company said in a March 4 conference call with investors that it expected to have its borrowing base reduced. Peter Scott, Lightstream’s chief financial officer, said on the call that the oil and gas producer could issue first-lien notes to pay down the credit line. It’s also being sued by bondholders after a distressed debt exchange last year.

Lightstream Resources shares fell as much as 35 percent Monday morning and were trading at 24 Canadian cents a share at 11:06 a.m. in Toronto. The company’s 8.625 percent unsecured notes maturing in 2020 last traded at 4.25 cents on the dollar on April 22.

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