Xcite Energy share price plummets and have “minimum residual” value
The share price in North Sea oil company Xcite Energy tanked over 75 per cent following an announcement that bondholders would be taking control of the company.
The Aim-quoted company has been in talks with the noteholders of its $135m of senior secured bonds and there had been hope of reaching an agreement that would see some return for equity investors – the company's share price increased by over 30 per cent last week in reaction to such hope.
But in a statement to the market the company announced:
Whilst terms of the restructuring have still to be agreed, the company now believes that there will be a minimal residual equity stake attributed to the company's existing shareholders following the restructuring.
In its annual results announcement on 21 March, Xcite Energy said it had entered into discussions with its principal bondholders with respect to a potential restructuring of the bonds.
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On 16 June the company revealed that it had negotiated an maturity extension to 30 September in order to continue discussions. Xcite Energy also warned shareholders they should be ready to see bondholders take control of some of the equity in the company, effectively cutting the value of their stake in the business.