CALGARY – Compton Petroleum Corp. (TSX:CMT), a Calgary-based oil and natural gas company, has struck a deal to reduce its debt, raise $50 million in new financing and consolidate its shares.
Compton announced Monday an agreement to:
– Convert US$193.5 million of its senior notes due in 2017 and US$46.8 million of convertible notes due this September into shares of the company.
– Add about $50 million of new equity in a private offering that will be used to reduce debt.
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– Consolidate existing common shares on a 200-for-one basis.
– Reduce total debt to $145.3 million from $419.6 million, resulting in reduced cash interest and financing charges of about $25.5 million.
The recapitalization deal is expected to be completed by the end of August.
The company said its employees, suppliers and customers will not be affected by the financing transactions, which will put the energy producer in stronger financial condition.
“The recapitalization provides the best available solution to our ongoing debt issue by normalizing our capital structure to be on a level playing field with other natural gas producers,” said Tim Granger, president and CEO, said before stock markets opened Monday.
“The recapitalization is critical to Compton’s business strategy, providing a stronger financial foundation on which to operate. The corporation will now be able to turn its full attention to its asset base, targeting production and cash flow growth through the internal development of its asset base.”
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