IGas Energy (LON:IGAS) shares plunged by more than 20 percent on Wednesday morning, following an update on the company’s debt restructuring plans.
The company announced that it has secured an additional $35 million investment from Kerogen Capital, alongside a potential debt-for-equity swap with its current lenders in order to stimulate further capital.
The company stated that the restructuring plan would be “sustainable” within the context of the current oil price environment, which has pushed higher following an agreed OPEC output cut. Furthermore the move would ensure that subject to stakeholder approval, the company would be able to continue to maintain its valuable agreements.
However, whilst the plans look to narrow the UK Shale gas company’s existing debts, it will also “significantly dilute” existing stakeholders.
It projects that the restructuring will see a partial equitisation of the group’s secured bonds, which currently is down by $125.6 million. In addition, unsecured bonds totaling $27.4 million will be fully equitised.
Chief executive Stephen Bowler of Igas commented in a statement: “This potential investment recognises the underlying value in the IGas group, both through its stable production assets, significant shale acreage and c.US$230m carry from its partners.
“Upon completion of the potential transaction, we would have a capital structure that we believe is sustainable in the current oil price environment and that will enable the company to capitalise on value accretive opportunities.
“We look forward to working with Kerogen Capital and our existing stakeholders to finalise the terms of the potential transaction.”
Shares in IGas Energy are currently down 25.55 percent at 11.31AM (GMT).