Struggling Canadian oil company Ivanhoe Energy Inc. (Nasdaq: IVAN, TSX: IE), which had until Jan. 30 to negotiate with bondholders, has still not made an interest payment, according to Ivanhoe CFO Blair Vago.
However, the company has not yet received a notice of default, Vago says, and is still in talks.
Ivanhoe, headquartered in Vancouver, is an oil exploration and development business that has one project in Canada and one in Ecuador. The negotiations come while the business is in the midst of a restructuring process and working to raise its stock price so it doesn't end up delisted from the Nasdaq exchange.
More oil and gas companies are expected to face distress because of a decline in crude oil prices. (For more on the trend, see Investors Flow Into Oil & Gas.)
On Jan. 21, Ivanhoe announced it was scaling back operations in Ecuador in response to lower oil prices.
Ivanohe expected to miss the Jan. 30 payment deadline, the company said in a Jan. 28 press release that was filed with the U.S. Securities and Exchange Commission on Jan. 30. The company owes $1.9 million from a cash interest payment it missed in December on 5.75 percent convertible unsecured subordinated debentures. Originally, Ivanhoe had until Jan. 30 to pay or restructure the debt so that payment wasn't necessary.
In that same Jan. 30 filing, the company says it is still in recapitalization talks, and that it is still considering strategic and financial alternatives to alleviate its debt burden. In a previous interview with Mergers & Acquisitions, Vago indicated restructuring the company was likely. "I don't think we're looking to sell any of our assets right now. It's not a good time to sell," he said.
On Jan. 13, Ivanhoe received a notice from the Nasdaq saying it had 180 days, until July 13, to regain compliance because its stock price is too low.
As of Sept. 30, Ivanhoe had 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 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. For more on Ivanhoe, see After Missing Interest Payment, Struggling Energy Co. Ivanhoe Works to Restructure.
For the previous edition of Turnaround Tuesday see Still Troubled, Viggle Gets Another $2M Loan from CEO.
For more struggling companies, see Mergers & Acquisitions Distressed Company Watch List.