Echo Energy PLC (LON:ECHO) revealed it is seeking to defer cash interest payments on its debts through the remainder of 2020, as it continues to respond to challenging market conditions as the coronavirus pandemic grips the world
“Echo is proactively managing its assets and cost base with a clear strategy in place to reduce costs and conserve existing cash,” Martin Hull, Echo chief executive said in a statement.
“If fully implemented, these actions would lead to a sustainable and cash positive business in the current environment and position the company well for the future," he added.
Interest payments are due on 31 March for Echo’s €5mln at 8% secured convertible debt facility, its £1mln at 12% loan facility and a Luxembourg listed €20mln at 8% secured notes.
Echo said it has begun talks with holder of its unlisted debt instruments and, based on indications of support to date, it expects it will be able to restructure those debts and agree cash interest deferrals.
Meanwhile, it is also seeking to shortly convene a note-holder meeting for its listed debt instrument, but, does not expect to be able to hold such a meeting before the March 31 payment date.
It stated, therefore, that: "if the next quarterly Note interest payment is not made on 31 March 2020, the company would be in default on the Notes until such time as note holder approval is received.”
Production performance and payments
Echo also told investors that its production operations in the Santa Cruz Sur fields have continued uninterrupted and production levels, and are expected to remain, in line with the company's expectations.
It produced an aggregated of 351,797 barrels oil equivalent net in the period from 1 November to 23 March 2020.
Since Echo’s last market update, on 17 March, it has received US$1.31mln for an oil shipment in February and a further US$360,434 is expected in the next two weeks. Sales invoices for US$610,140 were issued earlier this month and a shipment of around 26,000 barrels is due to be loaded in mid-April.
Commenting on the impact of coronavirus, Hull added: “The COVID-19 pandemic and market conditions have rapidly evolved in recent weeks and the welfare of the company's employees and contractors is of critical importance to Echo.
“The significant majority of the company's employees in London are now effectively working remotely and suitable precautions are being taken on-site at Santa Cruz Sur to ensure the safety of workers in the field whilst maintaining important domestic production for the Argentinian market.”