Current BCEI Stock Info

Bonanza Creek has sufficient cash to make payment, but chooses to maintain liquidity

Denver-based Bonanza Creek Energy (ticker: BCEI) announced that it will not make the scheduled payment on its $500 million 6.75% senior notes due in 2021. The company has enough cash to make the $16.9 million payment, but has elected to enter into a 30-day grace period, the company said in an 8-K filing with the SEC.

This is the second interest payment Bonanza Creek has elected not to pay on-time since August when the company announced that it would not pay the interest on its 5.75% senior unsecured notes. BCEI made the payment later in August, but has begun using its grace period on other loan payments. The company continues to make deficiency payments on its overdrawn revolver, as well, with the last of six $14.7 million monthly deficiency payments due in November.

“BCEI has plenty of liquidity to make both the past due interest payment and its final revolver deficiency payment. Our model estimates that BCEI ended 3Q16 with >$100MM of liquidity,” a note from Capital One Securities this morning read.

The company’s shares fell more than 5% in early trading Monday as S&P downgraded the company’s investment rating to D from CC.

Bonanza Creek has been fighting an uphill battle since the senior management team retired and commodity prices plummeted in mid- and late-2014, respectively. The company also decided to suspend its asset sales in August when it announced that it would not be making the $300 million interest payment on its 5.75% notes. The company received economically strong bids on both its RMI and MidCon assets with the assistance of a third-party advisor, but the proposals contained significant going concern representations resulting from the company’s liquidity constraints, prompting BCEI management to suspend the sales.

Legal Notice