Lightstream Confirms Debt Swap Proposal to Bolster Finances

  • Noteholders would see debt converted into equity stakes
  • Oil producer still working on credit revolver, sale of notes

Lightstream Resources Ltd. said Thursday it reached definitive terms for a rescue plan that swaps debt for equity in the Canadian energy company.

The Calgary-based oil producer confirmed details of a previously announced plan that would reduce debt by $904 million and reduce interest payments. Holders of its 9.875 percent second-lien secured notes would swap their investment for a 95 percent equity stake, according to a statement.

Holders of the 8.625 percent unsecured notes would receive 2.75 percent of new common shares, plus 5 million five-year warrants. Existing shareholders would see their stakes exchanged for 2.25 percent of new common shares and a separate series of 7.75 million in five-year warrants.

Lightstream has struggled to stay afloat through the two-year oil price rout that has eroded its market value to C$20.9 million ($15.9 million) from C$5.84 billion in 2010. Two unsecured bondholders, Mudrick Capital Management LP and FrontFour Capital Group LLC, are fighting the debt swap deal. They previously sued the company after an earlier debt exchange.

Lightstream said it’s still working on securing a $400 million revolving credit facility that would be used to repay its existing credit line and provide working capital. Another $38.5 million in proceeds would come from an offering of 12 percent second-lien secured notes due in 2020, the company said.

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