Laricina Energy granted CCAA protection following notes payment demand

By Caroline Salls

Pittsburgh, April 6 – Laricina Energy Ltd. and wholly owned subsidiaries Laricina GP Holding Ltd. and 1276158 Alberta Inc. have been granted creditor protection under the Companies’ Creditors Arrangement Act, according to a news release.

“Requesting this creditor protection was a difficult, but necessary step,” president and chief executive officer Glen Schmidt said in the release.

“This was done after careful consideration of all available alternatives, and the Laricina board of directors believes that this is in the best interests of all its stakeholders.

“We will continue to work hard with our advisors to pursue strategic alternatives as we seek to restructure and further reduce costs.”

Specifically, the company said CCAA protection was obtained under a March 30 order by the Court of Queen’s Bench of Alberta. The protection was effective as of March 26.

CCAA protection stays creditors and others from enforcing rights against Laricina and affords the company the opportunity to restructure its financial affairs, the release said.

Payment demand

According to the release, Laricina sought CCAA protection following receipt of a demand for payment in full by March 26 from the sole holder of all amounts due under the indenture for the company’s $150 million of 11½% senior secured notes issued in March 2014.

The company said the noteholder issued a notice of intention to enforce security against Laricina’s assets with its demand for payment. At the time of Laricina’s application for the CCAA protection order, the noteholder made a cross application for a receivership order, which was adjourned indefinitely by the court.

The company said it has sufficient liquidity for the initial CCAA stay period, which expires on April 24 and is subject to extension.

During the stay period, Laricina will formulate a restructuring plan.

While under CCAA protection, Laricina’s board of directors continues in its usual role and its management remains responsible for the day-to-day operations of the company under the oversight of court-appointed monitor PricewaterhouseCoopers Inc.

The monitor will be responsible for reviewing Laricina’s ongoing operations, assisting the company with the development and filing of the plan, liaising with creditors and other stakeholders and reporting to the court.

Laricina’s operations are expected to continue uninterrupted during the CCAA process.

Alternatives review

In November 2014, the company announced a strategic alternatives process. While under CCAA protection, this process is expected to become part of the plan, and Peters & Co. Ltd., BMO Capital Markets and Morgan Stanley Canada Ltd. will continue as the financial advisors in connection with that process.

In addition BMO Capital Markets will assist the company in negotiating and restructuring its existing debt obligations and supporting development of the plan.

Laricina announced in early 2015 it was in default of some production covenants and, as a consequence of the production default, a related working capital covenant. Since then, Laricina had been engaged in talks with the noteholder on potential solutions to addressing its note debt and current financial situation.

However, the company said the parties have not arrived at a mutually satisfactory solution.

The estimated amount owed to the noteholder as of March 30 was $164.2 million in principal and interest.

In addition the noteholder claims a $9.7 million acceleration payment is owed. This claim is being examined by the company and its advisers.

Current estimated cash and cash equivalents on hand were roughly $140 million as at March 30, according to the release.

Laricina is a private, Calgary, Alta.-based energy company.

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