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Nighthawk Energy files for Chapter 11
US-focussed oil development and production company Nighthawk Energy has filed for protection under Chapter 11 of the United States Bankruptcy Code, it announced on Tuesday.
The AIM-traded firm's first-tier US subsidiary, Nighthawk Royalties, also filed for Chapter 11 protection.
On 19 April, the company received a notice of default from the Commonwealth Bank of Australia relating to its 18 April deadline for a definitive agreement of sale or restructure as set forth in the 9th Amendment.
As a result, the company remained subject to possible remedial actions by Commonwealth Bank that could include foreclosure or other recourse against its assets and its US subsidiaries.
"It is, however, the company's belief that Commonwealth Bank will continue to allow the company to pursue in good faith its plan of restructure or asset sale on or before 1 June," the Nighthawk board said in its statement.
"The company has therefore acted in filing for protection under Chapter 11 in order to preserve its ability to pursue the asset sale or other restructuring proposals."
Additionally, Nighthawk said it entered into a non-binding letter of intent with one of the parties identified by its investment banker to explore the possibility of an asset purchase on or before the maturity date of its credit agreement with Commonwealth Bank of 1 June.
"Whilst there can be no certainty the company will proceed with the asset sale route, it is likely that any such sale would be effectuated through an additional future voluntary Chapter 11 bankruptcy filing by its US operating unit, Nighthawk Production, which has not, to date, filed for protection under Chapter 11, and would yield no residual value for shareholders whose interests are subordinated to the claims of creditors and expenses of administration."
Nighthawk said it remained open to discussions with its major stakeholders regarding a possible alternative proposal for restructuring the Commonwealth Bank loan and a recapitalisation of the company.
"The company continues to meet all its operating and financial obligations on a timely manner and its current cash position is approximately $2m following receipt of the most recent monthly net production revenue, all of which remains subject to the lien held by Commonwealth Bank.
"This amount is sufficient to maintain its current operating level and cover all these expenses, save for the repayment of the Commonwealth Bank loan principal through the anticipated restructuring process."