Foothills Resources gets loan forbearance, must hire advisor to develop restructuring plan

By Sara Rosenberg

New York, Aug. 15 - Foothills Resources Inc. entered into a forbearance agreement with the lenders under its credit facility regarding non-compliance with the asset coverage and leverage ratio covenants as of June 30, according to a news release.

The agreement requires the company to hire an independent investment adviser to develop and facilitate a plan of restructuring and to deliver this plan to the loan lenders on or before Sept. 15 - the date on which the forbearance expires.

The goal is to determine a specific timeline to either cure the default or restructure the credit facility.

The restructuring plan is expected to consider a range of strategic alternatives, which may include a sale of a portion of the company's assets, a merger or other business combination, or the issuance of equity or other securities, in connection with the repayment of all or some of the bank debt.

Currently, the company has a $50 million term loan outstanding and $21.9 million drawn under its $50 million revolver.

Foothills Resources said that it expects to require similar forbearance agreements in future periods and that the restructuring plan may impair its operations and future prospects.

Wells Fargo Foothill is the agent on the credit facility.

Foothills Resources is a Bakersfield, Calif.-based energy company.

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