Oklahoma-based SandRidge Energy confirmed on Wednesday that it has hired advisers to evaluate potential restructuring options.
SandRidge said in a Securities and Exchange Commission filing that it has engaged advisers to evaluate strategic alternatives that could include restructuring, refinancing of existing debt through a private restructuring or reogranizaiton under Chapter 11.
“As a result of these uncertainties and the likelihood of a restructuring or reorganization, management has concluded that there is substantial doubt regarding the company’s ability to continue as a going concern as it is currently structured,” SandRidge said.
SandRidge’s total debt stood at $3.6 billion as of December 31.
The company also had $11 million in outstanding letters of credit as of December 31 and preferred stock outstanding with an aggregate liquidation preference of $542 million.
The company said its “substantial level of indebtedness” and dividends tied to its outstanding preferred stock increase the possibility that it may be unable to generate enough cash to make principal, interest or divided payments.
SandRidge added that the inclusion of a statement in its full year consolidated financial statements citing the firm’s “substantial doubt” about its ability to remain a going concern could result in a default under the terms of its senior secured revolving credit facility.
If SandRidge does not obtain a waiver for that covenant within 30 calendar days its senior credit facility lenders will be able to accelerate maturity of the debt.
