Cash strapped services player Norwegian Energy Co ASA has requested a bond interest payment deferral and is floating a restructuring plan as its financial outlook continues to “deteriorate.”
The Stavanger, Norway-based company known as Noreco requested a deferral for bond interest payments Monday and said it can no longer meet the terms of previously requested waivers for $82.6 million in bond payments and a $12.46 bond interest payment.
The payments were due December 9.
The company said in its restructuring proposal it “sees no ability” to service its debt and cannot “justify” interest payments.
“Noreco’s financial situation and outlook has continued to deteriorate due to the significant and continued drop in oil prices, increases in projected operating costs and accelerated retention of cash to cover future abandonment costs,” CEO Tommy Sundt said.
Noreco’s board has approached the company’s lender, Nordic Trustee, and its bondholders with a restructuring plan that calls for farming down stakes in various unspecified wells and a full conversion of its $426 million bond debt.
“The board’s current assessment is that full conversion of bond debt is necessary to maintain going concern and to create a sustainable solution where values can be best preserved and underlying values realized for all financial stakeholders,” the company said.
The company is currently projecting a cash shortfall of about $188.32 million at the end of 2015.
Noreco’s financial woes are being compounded by another round of delays at the troubled offshore Huntington field.
Production at the field stopped in October and will now be further delayed due to “an incident during restart of the CATS riser platform.”
The riser platform will be closed at least until December 18, although Noreco expects a longer delay.
The field’s 2015 production plans indicate a significant drop in output compared to previous estimates.
Norway-based Noreco holds a 20 percent interest in Huntington.
The company was forced to take about $110 million in write downs this year that are expected to have a “significant negative impact on cash flow in 2015 and beyond.”
Last year, bondholders approved a $460 million refinancing plan as Noreco faced insolvency following the shutdown of fields in the UK and Denmark.