Investors in debt laden Gulf Keystone Petroleum Limited (LON:GKP) may not have to fear the worst, according to broker Mirabaud.
Whilst the Kurdistan-based oil producer has some US$575mln of bonds outstanding, and needs to raise US$71-88mln of new capital, analyst Richard Savage reckons the company can survive.
He doesn’t expect bondholders will spike the London Stock Exchange listed company – as “it may not sit well” with the Kurdistan authorities, which would complicate matters for whoever may pick up the assets next.
In a note, he said: “equity investors should brace themselves for dilution but the chances of being wiped out are minimal.”
Earlier today has extended a ‘standstill’ agreement with its lenders, which means it will now have until the end of the month to work on a possible debt restructuring.
Last month, Gulf Keystone’s lenders allowed waivers on coupon payments due on May 2 and May 3, and gave the company until May 20 to come up with a deal.
At that time the company said it was in constructive dialogue with a number of its stakeholders regarding the need for near-term fundraising and the restructuring of the company's balance sheet.
Gulf Keystone owes US$575mln, most of which is due to mature next year, and it also needs fresh capital.
The company needs US$71mln for work to maintain production from the Shaikan field at 40,000 bopd, whereas a plan to grow production to 55,000 bopd requires a total of US$88mln.
Experts believe restructuring could see debt being swapped for equity alongside some form of capital injection.