Quicksilver Resources Inc (OTCMKTS:KWKA) decides that it won’t make payment of $13.6 million interest due next week on bonds maturing in 2019. The company believes it to be in the best interest of its stakeholders. The company will utilized the 30-day grace period to negotiate with creditors, while it is considering opportunities to address its debt and capital structure.
Quicksilver has a 30-day period before the failure to make the payment could be considered a default. The company has been struggling with its cash position and has already hired advisers to draw a plan to boost liquidity and address near-term debt maturities.
Quicksilver Resources Inc (OTCMKTS:KWKA) has engaged Deloitte Transactions and Business Analytics, Houlihan Lokey Capital, and other advisors to assist the company with the evaluation of options to enhance liquidity, address short-term debt maturities and explore strategic alternatives.
In its last earning report, the company had more than $2 billion of outstanding borrowings and there is no assurance whether the company will be able to restructure its debt or sign any strategic transactions.
Quicksilver Resources Inc (OTCMKTS:KWKA) reported adjusted net loss of $12 million for Q3 2014 compared to $8 million for Q3 2013. The company forecasted Q4 capital spending to be approximately $22 – $27 million, representing full-year capital spending to $130 – $135 million.
Among other efforts, the company is also discussing with some of the leading security holders to derive possible strategies to address its capital crunch. The company’s global borrowing based was reaffirmed at $325 million in November 2014.
Bloomberg reported that the company’s market valuation has declined to $16.9 million from whopping $2.7 billion in 2010. Steep decline in natural gas prices has severely impacted the company’s business and its capital structure.
In early hours, the stock is trading 7% down from its previous close.