Gulf Keystone Petroleum Ltd (LON:GKP) has announced a standstill agreement with the bulk of its lenders while it arranges a more permanent debt restructuring.
Broker Mirabuad believes a restructuring deal is likely to involve a debt for equity swap and some form of capital injection.
The standstill agreement runs until 20 May, extendable until 31 May, and covers holders of up to 75% of each class of the loan notes and bonds.
Gulf Keystone added it will not pay the US$26mln coupon due in April, but failure to make payments after that may trigger a default notice from the debt holders that have not signed the standstill agreement.
In that event, the standstill signatories will not approve any demand for immediate repayment while the agreement is still in place.
Gulf Keystone has debts US$575mln, most of which are due to mature next year.
It has already warned it needs to spend US$71mln on its Shaikan field in Kurdistan to maintain production at 40,000 barrels of oil per day, and to grow production to 55,000 bopd, as previously targeted, a capital investment of US$88mln would be needed.
Shares fell 3% to 5p valuing the company at £49mln.