Canacol Energy (TSX: CNE) is headed to creditor protection. The company this morning indicated that they have made a filing with the Court of King’s Bench of Alberta under the Companies’ Creditors Arrangement Act in order to pursue a restructuring.
The need for restructuring comes as the company is set to face a liquidity crisis from upcoming interest and principal payments under funded debt obligations. In their most recent financial statements, Canacol indicated that principal and interest payments totaling $25 million were due in November, which exceeds the $18.3 million on the books as of November 14.
That $25 million figure includes a monthly installment payment of $6.25 million, which is part of an accelerated amortization event clause on a $50 million term loan held by the company that was triggered in Q2. The clause requires eight equal monthly installments of $6.25 beginning September 15, 2025, to repay the loan.
Without that term loan being refinanced – which it evidently was not based on today’s filing – it was clear where the company was headed, as outlined under the ‘going concern’ portion of their most recent financial statements, which were filed last week.
To add insult to injury, Canacol earlier this month lost a court case, resulting in the firm owing $22 million as part of the arbitration proceedings. This, combined with reduced natural gas production and increased trade and other accounts payable, effectively pushed the company over the edge into restructuring proceedings.
An initial order is being sought under the CCAA, which would allow for a stay of proceedings, and see the appointment of KPMG as a monitor of the company. Canacol meanwhile expects to make a Chapter 15 filing under the US Bankruptcy Code as well, alongside a similar filing in Colombia.
Canacol last traded at $1.53 on the TSX, although the company is expected to be delisted in line with the filing, with trading currently halted.
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