US independent Caza Oil has been given an extra month to agree payment of its $45million debt to lender Apollo Investment Management.
A forbearance period had previously been extended until November 30 and has now been further extended until December 31, on the basis that Caza is expected to conclude a financing or a complete refinancing that will enable the debt to Apollo to be repaid.
The company entered into a Note Purchase Agreement two years ago when Apollo agreed to purchase up to $50million of it senior secured notes.
In September, it was revealed the balance of the Note Purchase Agreement remained at $45million and, although expected to comply with certain financial requirements, Caza was found to not be in full compliance.
Caza said it has been in advanced discussions since early October with a third party regarding a potential equity financing, but added: “Although the company has had the continued support of Apollo during the course of these discussions, there can be no certainty that the potential transaction will close or that Apollo will continue to grant ongoing forbearance.”
“If the potential transaction is consummated, it is likely to take the form of an equity investment in the company which, given the current oil and gas commodity pricing environment, is likely to subject the company’s existing shareholders to significant dilution,” Caza said in a stock market statement.
Caza’s said its objective remains to conclude a financing or a complete refinancing structure that might enable the company to pay Apollo and provide additional capital to continue to develop its Bone Spring assets in Delaware.