Struggling oil company Ivanhoe Energy Inc. (TSX: IE, Nasdaq: IVAN) is continuing negotiations with bondholders after receiving a notice of default.
"We are involved in discussions with the bondholders that involve a potential restructuring," says Ivanhoe CFO Blair Vago. "The trustee has taken no action other than requesting payment of the interest."
The Vancouver-based oil exploration company didn't make a $1.9 million interest payment on 5.75 percent convertible unsecured notes that was due Dec. 31, but had received until Jan. 30 to negotiate or pay. The company still hadn't come to an agreement with the bondholders or made the payment at that date, Vago previously told Mergers & Acquisitions. For more, see Past Due on Interest Payments, Ivanhoe Continues Bondholder Negotiations.
On Feb. 9, Bank of New York Mellon, the trustee for the notes, sent a notice of default that Ivanhoe announced in a Feb. 13 filing with the U.S. Securities and Exchange Commission.
The business says there is doubt about its ability to continue as a going concern, or without the threat of liquidation, because of losses. As of Sept. 30, Ivanhoe had an accumulated deficit of about $570 million.
In addition to problems surrounding the interest payment, Ivanhoe has received multiple notice from the Nasdaq exchange citing non-compliance with listing requirements. One recent notice came after Robert Pirraglia, who was on the board of directors, resigned, leaving Ivanhoe with fewer than the Nasdaq-required three audit committee members. In January, Ivanhoe received a notice that it wasn't meeting Nasdaq listing requirements because its stock price was too low.
On Feb. 4, Ivanhoe terminated an agreement with Empresa Estatal de Petroleos del Ecuador Petroecuador to develop a heavy-oil field, as part of a plan to scale back exploration activities in Ecuador announced previously.
Ivanhoe has been working to restructure debt and has considered a recapitalization or sale of the company or assets, according to SEC filings. Vago previously told Mergers & Acquisitions that restructuring was more likely than a sale. For more, see After Missing Interest Payment, Struggling Energy Co. Ivanhoe Works to Restructure.
Oil and gas companies, as well as industry service providers, are expected to face distress in the wake of low crude oil prices. For more, see the previous edition of Turnaround Tuesday, Oil Co. Infinity Explores for Capital, plus Investors Flow Into Oil & Gas and Distressed Debt Investment Opportunities Are Expected to Rise.
Dealmakers are also predicting a short-term decrease in energy-related M&A deals, according to Mergers & Acquisitions Mid-Market Pulse index.
For more struggling companies, see Mergers & Acquisitions Distressed Company Watch List.