Bellatrix shares plunge on proposal to trade debt for 83.5% of its equity value

Shares in Bellatrix Exploration Ltd. fell by as much as 35 per cent Friday after it proposed a deal that would leave its existing shareholders with just 16.5 per cent of the company.

The Calgary-based oil and gas producer says it intends to exchange $146 million US in senior unsecured notes due in 2020 for $100 million US in new debt maturing in 2023, plus common shares totalling 51 per cent of the company’s float.

It is also offering to trade $50 million in convertible debentures for another 32.5 per cent of its common shares following the recapitalization.

Bellatrix says the transactions — which are subject to approval by debtholders and court and regulatory authorities — would reduce its total outstanding debt by about $110 million to about $328 million and reduce annual interest payments by over $12 million.

Two weeks ago, the company warned investors that its ability to continue as a going concern was in doubt given a pending credit review and uncertainty about refinancing its senior notes.

It said its net loss in 2018 was $146 million, compared with a net loss of $91 million in 2017.