Lightstream pitches recapitalization to cut debt by $904 million

Bloomberg

Lightstream Resources Ltd., a Canadian energy company struggling to repay creditors, is proposing a debt-for-equity swap that would see its top-ranked bondholders take majority ownership.
The oil producer, facing a July 15 deadline to make an interest payment, has an agreement regarding the proposal with a committee representing 91.5 percent of the second-lien secured notes, the company said in a statement late on Tuesday.
The restructuring would cut Lightstream’s debt by $904 million and reduce interest payments by more than $86.1 million a year, the company said.
The recapitalization plan follows last month’s deferral by Lightstream of a $32.1 million interest payment coming due, which triggered a 30-day grace period to make the payment. The company has been contending with a mound of debt amid a crude market rout that began in 2014.
The company was sued over a distressed debt exchange it organized last year, which gave two funds run by Apollo Global Management LLC and Blackstone Group LP’s GSO Capital Management second-lien claims on Lightstream’s assets, pushing other bondholders further down the line for a payout in the event of a restructuring.
Lightstream plans to restructure through the Canada Business Corporations Act and will seek court approval in Alberta Wednesday for creditor protection while it continues talks to finalize the proposal, according to the statement.
Under the recapitalization, secured noteholders would take 95 percent of the company’s equity, while unsecured noteholders would hold 2.75 percent and warrants equal to 5 percent of the shares.
Existing shareholders would own 2.25 percent of shares as well as warrants equal to 7.75 percent of the shares.
If the arrangement doesn’t proceed, Lightstream plans to undertake a sale through the Companies’ Creditors Arrangement Act and has already hired advisers to begin soliciting interest.