Sunday, October 16, 2016

Bonanza Creek Energy Missing Interest Payment

While it has sufficient cash on hand to make the payment, Bonanza Creek Energy, Inc. (the “Company”) has elected not to make the interest payment due on October 15, 2016 with respect to its $500 million 6.75% senior notes due in 2021 (the “2021 Notes”). By not making the interest payment, the Company will enter into a 30-day grace period during which it retains the right to pay the interest due to the holders of the 2021 Notes and thereby remain within compliance of the bond indenture. The 30-day grace period also applies to any potential cross-default under the Company’s credit facility with respect to the bond interest payment.

5 comments:

ADL said...

Once more, you nailed it. Do you think they pay during their grace period and kick it a bit further along? My mind is on no, but my money hasn't decided.

Anonymous said...

Probably no. Remember they slashed capex so revenue must have really dwindled by now. Probably just RSA haggling behind the scenes right now.

Anonymous said...

I agree. The borrowing base of the company's revolving credit facility is currently being redetermined; this is done semi-annually, in April and October of each year. The last 10-Q makes very clear that a further reduction of the borrowing base is expected during the October redetermination process.

Anonymous said...

Also, with regards to the point immediately above, note specifically that: "because the revolving credit facility is effectively fully drawn, any reduction of the borrowing base would require mandatory prepayments to the extent existing indebtedness exceeds the new borrowing base. The Company may not have sufficient cash on hand to be able to make any such mandatory prepayments."

ADL said...

@Anonymous: Those were just my thoughts, balanced only by the can-kicking environment we seem to be in. Hopeful bankers, after all, helped create this situation, and I'm not sure the pendulum has swung back yet. Still, seems like a reasonable bet that it's over.