Bondholders of the owner of a key North Sea field have rejected a restructuring plan and have moved to call in liquidators.
Shares in Xcite Energy have been suspended after the company revealed that the bondholders were “not satisfied that the transaction is capable of being implemented in a manner acceptable to them”.
The board of Xcite, led by chief executive Rupert Cole, had said it had negotiated a deal with the lenders whereby they would exchange 98.5% of the company’s shares for 100% of the value of outstanding bonds. It had previously said that the bondholders had “unanimously” backed the deal.
The board’s deal was highly unpopular with shareholders who faced seeing 98.5% of the value of their shares wiped out. Following the move by the bondholders, their holdings in the company are set to be wiped out completely. In a statement, Xcite said: “The directors believe that liquidation is unlikely to result in the return of any value to the Company’s existing shareholders.”
Ian McLelland, global head of natural resources for Edison Investment Research, said the move to appoint liquidators meant the future of the North Sea Bentley field was “more uncertain than ever”.
He said: “Following the previously announced debt for equity swap, Xcite’s existing shareholders were always going to lose almost everything, retaining only 1.5% of the equity value in the event the deal went through.
“Xcite’s bondholders, however, had a choice and appear to have gone down the route of cutting their losses rather than taking control of the company. This is a big blow for everyone, and suggests that management could not broker a deal to sell its prized Bentley asset at pretty much any reasonable price.
“Timing could not have been worse for the UK, as the newly independent Oil & Gas Authority (OGA) attempts to drive the industry towards Maximum Economic Recovery (MER). The Bentley field was one of OGA’s strategic priorities when it was formed, now its future is more uncertain than ever.”
The firm said it it expects to remain a going concern during the process. Bondholders are expected to petition the court in the British Virgin Islands where Xcite is registered within the next 10 days requesting the appointment of a liquidator. This is then expected to take effect in the next four to six weeks.