(BPZ Resources, Inc., 2.Mar.2015) – BPZ Resources, Inc. announced it will exercise a provision under the bond indenture for the 6.5% Convertible Notes due March 1, 2015.
The bond has an outstanding principal amount of $60 million, whereby the company will avail itself of the 10-day grace period provided for in the Indenture on principal and a 30-day grace period on interest due for a total amount due of approximately $62 million. Once exercised, the grace periods will expire on March 10, 2015 for principal and March 30, 2015 for interest.
The company is engaged in discussions with representatives of certain holders of the Notes of the company’s Convertible Bonds issued with combined outstanding principal amounts of $229 million, maturing March 1, 2015 and October 1, 2017. These discussions include among other items, the potential terms under which one or both bond issues could be restructured to provide a capital structure which would allow the company to continue developing its oil and gas assets. Discussions are also underway with other potential investors regarding alternative financing solutions.
While the company is reviewing several options, an appropriate solution may not be found during the grace period. If the company does not make the payment due on the 2015 Notes and a resolution cannot be reached by the end of the grace period, the company would be in default under the terms of the 2015 Indenture. This action would result in cross defaults to the 2017 Convertible Bond issue, and could force the company to seek Chapter 11 Bankruptcy protection, which is designed to provide protection from creditors while a company seeks restructuring and financing solutions to enable it to remain an economically viable business.
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