Twin Butte Says Reignwood Deal Failure Would Mean Credit Default

  • Company responds to statement from dissident bondholder group
  • Company says sale is ’best and only choice to preserve value’

Twin Butte Energy Ltd. said the dissident creditor group fighting its proposed sale could put the company into default on its credit line if it achieves its goal of blocking the deal.

The company entered a sale agreement with Reignwood Group and Horizon Holding Group of China and Canada on June 24. If the vote on that proposal fails at an Aug. 29 meeting the sale can be terminated, the company said in a statement Thursday. At that point. it would be in default under its C$85 million non-revolving senior lending facility, Twin Butte said.

The Calgary-based oil and natural gas producer is operating under a forbearance agreement with its bank syndicate under which its credit line isn’t considered in default as long as it meets certain conditions, including that the sale go through by Sept. 26.

“In the board’s view, (the sale agreement) represents the best and only choice to preserve value for all stakeholders,” Twin Butte said.

A committee of Twin Butte’s convertible debt holders has been fighting the sale on the grounds that it unfairly protects company insiders and management and doesn’t respect the priority of the oil and gas producer’s convertible-debt holders. The group has proposed a debt-for-equity swap instead, according to Murray Bockhold of Bockhold Investment Management Group, who’s a member of the committee.

Bockhold didn’t immediately respond to requests for comment.

The bondholders need more than a third of the votes to be against the proposed to defeat it. Bockhold said in an interview Wednesday that they currently have about 25 percent of bondholders, which gives them the ability to force a restructuring under the Companies’ Creditors Arrangement Act.

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