Delphi Energy Corp. said on Tuesday it filed for court protection after failing to strike a deal with its lenders, making it one of the first Canadian oil and gas victims of the COVID-19 economic crisis.
Delphi said it had lined up alternative funding to bring it in line with its debt covenants, but its senior lenders rejected the plan and blocked any further withdrawals from its line of credit.
The small producer had been conducting a search for a transaction, such as a sale or merger, and said it plans to continue the effort while it restructures under protection from creditors.
“The company exhausted its options to successfully negotiate an agreement with the senior lenders in this challenging environment of the COVID-19 pandemic combined with an unprecedented oil price collapse,” Delphi Chief Executive Officer David Reid said in a statement.
“We are all very disappointed with this result.”
Delphi shares closed at 35 cents on Tuesday, representing a drop of more than 93 per cent over the past year. The company is majority owned by Luminus Management LLC.
The crisis has hit small and medium-size energy companies hardest, as steep drops in cash flow threaten their access to credit, especially if they have other debt obligations or were struggling before the oil-price collapse. Delphi underwent a recapitalization late last year, which included a one-for-15 share consolidation, private placements of equity and extension of debt maturities.
Before the company filed under the Companies’ Creditors Arrangement Act, Harry Campbell and Lamont Tolley resigned from the board, Delphi said.
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Jeffrey Jones