Hurricane Energy restructuring rejected by court

Troubled West of Shetland oil and gas explorer Hurricane Energy plc said on Monday the High Court of Justice of England and Wales has not sanctioned its complex debt restructuring plan.

The plan would have given control to Hurricane’s bondholders in exchange for forgiving $50 million of debt and extended the maturity date on a further $180 million of bonds due to be repaid in July next year.

Hurricane shareholders including Crystal Amber Fund, which owns about 14% of Hurricane, oppose the restructuring plan.

Hurricane shares, which have been in the doldrums, rallied about 30% to around 2.80p.

The existing Hurricane board is considering all options, including an appeal,” said Hurricane.

“Unless the company or the Ad Hoc Committee successfully appeals the judgment, the restructuring plan will not be implemented.

“The company’s convertible bondholders have certain rights under the terms of the convertible bonds which, if enforced, could result in an acceleration of the convertible bonds and ultimately an insolvent liquidation of the company.

“As a result there is a significant risk of no value being returned to shareholders.

“The company notes that a number of its shareholders have indicated that they were not supportive of the restructuring plan and, as a result, have indicated an intention to vote against the re-election of those directors of the company that are standing for re-election at the upcoming AGM on 30 June 2021 and/or to vote in favour of resolutions proposed by Crystal Amber Fund Limited to remove all of the non-executive directors of the company at the upcoming EGM on 5 July 2021.

“It is the company’s understanding that, in the event all of the executive directors are removed from the board, the company’s nominated adviser is likely to resign with immediate effect.

“This is likely to have the result that the shares of the company are suspended from trading and, if a replacement nominated adviser is not in place within a period of one month, it may result in the shares of the company being de-listed from AIM.

“Further updates will be made when appropriate.”

Simon Walton, partner at Rosenblatt, acting on behalf of Crystal Amber Fund, said: “Against all the odds, this is a victory for shareholders big and small who faced having their legal rights being overridden.

“The board putting this restructuring plan before the court now was premature, and influenced by the committee of bondholders trying to take control of the company away from shareholders.

“As the judge recognised in his judgment, the bondholders’ desire to obtain control of the company is not a good reason to deprive the shareholders, now, of all but a fraction of their equity, rather than waiting to see if the actual performance over the coming months continues to improve.

“It is especially concerning that the current board was seemingly willing to exploit legislation introduced in response to the Covid pandemic to do so.”

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.