Xcite Energy Limited (LON:XEL) has cautioned there is “material uncertainty” over its financial position as it continues to work on a debt restructuring deal ahead of a September 30 deadline.
Bonds issued by a wholly owned Xcite subsidiary back in 2014 were initially due for repayment at the end of June, but as the company did not have sufficient funds a temporary extension was agreed.
In financial results, released today for the three months to June 30, the company warned of material uncertainty in relation to the group's ability to continue as a going concern.
Xcite told investors that negotiations with bondholders have been constructive, but no terms have yet been agreed.
Any deal with bondholders is expected to involve the issue of new equity in exchange for the debt.
For context of what will mean for existing shareholders, Xcite’s debt is US$140mln whereas it has a market capitalisation of around £16.5mln.
The company also noted that recently it announced the agreement over commercial terms for funding proposals regarding the first phase of the Bentley field development, though it stressed these arrangements remain contingent upon a farm-out deal to bring in a partner.
Xcite reported a US$600,000 loss for the three month period, and as at June 30 it had US$7.4mln of cash and equivalents.
Mirabaud analyst Richard Savage, in a note, said: “The results themselves do not contain any new information, which will be worrying for shareholders as time is ticking on the extended 30 September maturity of c.US$140m of debt, making the prospect of a restructuring effectively wiping out equity holders ever more likely.”