Lightstream Defers Interest Payment Seeking Debt and Asset Deals

  • Canadian oil producer has 30 days to pay or else defaults
  • Company talking to bondholders regarding debt-to-equity swap

The clock is ticking for Lightstream Resources Ltd. to fix its liquidity crunch after the oil producer put off an interest payment on its bonds.

The Calgary-based company is deferring a $32.1 million payment due Wednesday on its second-lien notes as it seeks solutions to repair its balance sheet, including a potential debt restructuring and asset sales, the company said in a statement on Tuesday. It now has 30 days to make the interest payment before defaulting, according to the statement.

Lightstream is talking to holders of its secured and unsecured notes about a possible conversion of debt to equity, continuing discussions with lenders about its credit facility and is pursuing asset sales, the company said. In addition, the producer postponed its annual general meeting, which it now plans to hold by Aug. 31, to save money in case there is a transaction requiring approval by shareholders that could also be voted on at that time.

The loan deferral is the latest effort by Lightstream to stay afloat after the crude market rout worsened the financial situation of the highly-leveraged producer. The company was sued over a distressed debt-exchange it organized last year, which gave two funds run by Apollo Global Management LLC and Blackstone Group LP’s GSO Capital Management second-lien claims on Lightstream’s assets, pushing other bondholders further down the line for a payout in the event of a restructuring.

Lightstream is focused on developing oil properties in the Bakken and Cardium in Western Canada. Chief Executive Officer John Wright in December 2014 said the company plans to sell all or a portion of its Bakken business unit, though not at “fire sale” prices.

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