UPDATED -- Troubled Canadian oil businessIvanhoe Energy Inc.(Nasdaq: IVAN, TSX: IE), which is in the middle of a restructuring process, has roughly six months to get its stock price up so the Nasdaq exchange does not remove the company's stock. The company also has until Jan. 30 to come to a deal with bondholders after it missed an interest payment, according to Ivanhoe CFO Blair Vago.
Ivanhoe, headquartered in Vancouver, announced on Jan. 20 in a filing with the U.S. Securities and Exchange Commission that the company received a notice from the Nasdaq that the company's share price didn't meet the exchange's requirements because it dipped to below $1 for 30 consecutive days. Ivanhoe's stock is also listed on the Toronto Stock Exchange, which doesn't have a minimum requirement.
The company is an oil exploration and development group that has two projects in development, one in Canada and one in Ecuador.
The company received the notice from the Nasdaq on Jan. 13, and has 180 days, or until July 13, to regain compliance. Ivanhoe says it is monitoring its stock price and that if an increase does not seem likely, the company will consider "other options" in order to achieve compliance. The other option is a share consolidation, according to Vago, who says that Ivanhoe will need to actively take steps to improve its share price, which is likely being hurt by the business' debt load.
In December, the company announced that it is working to address liquidity issues, funding requirements and capital structure, especially relieving the burden being placed on the company by its current debt structure. Options include the sale of the company, or part of it, recapitalization, debt restructuring or a combination of those options. Ivanhoe also missed a cash interest payment of $1.9 million that was due on Dec. 31 on 5.75 percent convertible unsecured subordinated debentures. The company has until Jan. 30 to make that payment or restructure so the payment isn't necessary, Vago says.
For Ivanhoe, restructuring is more likely than a sale, according to Vago. "I don't think we're looking to sell any of our assets right now. It's not a good time to sell," Vago says.
As of Sept. 30, the company has an accumulated deficit of about $570 million and a working capital deficiency of $4 million, according to an Oct. 30 SEC filing. At that point Ivanhoe said it was expecting to continue incurring losses as it developed its business, and that it planned to fund future operations with investments or financing from the public or private debt and equity markets. Given the lack of financing, Ivanhoe raised substantial doubts about its ability to continue as a going concern, or without the threat of liquidation, in the Oct. 30 filing.
In December, the company received a $540,000 bridge loan from founder Robert Friedland, who had provided a $2.2 million bridge loan in October for working capital purposes.
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