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IGas Energy 'well progressed' with talks with potential investor

Last updated: 10:46 29 Dec 2016 GMT, First published: 08:08 29 Dec 2016 GMT

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IGas says it continues to hold significant cash of around US$32 million as at December 22 this year

IGas Energy Plc (LON:IGAS) says it's "well progressed" with talks with a potential strategic investor, which could lead to a solution to its covenant breach issues.

A previously disclosed, the UK shale firm has recently met with certain bondholders and potential  investors to discuss a potential restructuring of the group and its finances.

However, it added today the caveat that there could be no certainty that an agreement will be reached or that a transaction will be forthcoming.

Currently, the firm expects to not be compliant with its leverage covenants (debt to cashflow) as at December 31 this year (2016).

But following legal advice, it said that if there is a breach, an equity cure provision exists within the bond agreements, such that a breach can be cured within 25 business days of the delivery of a compliance certificate.

For the 12 months to December 31 2016, the compliance certificate must be delivered by 30 April 2017, and accordingly the latest date for any equity cure would be early June 2017.

IGas says it continues to hold significant cash of around US$32 million as at December 22 this year and expects to remain compliant with its daily liquidity covenant until late March this year based on current forecasts.

It told investors today: "The board expects completion of the potential transaction would remedy any leverage covenant breaches as at 31 December 2016 and remedy the forecast breach of the daily liquidity covenants."

Shares eased 3.23% to 11.25p.

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