Here is the a key paragraph from Q3-22 financial report...
Bonterra aims to further strengthen the balance sheet and secure a financially flexible position free from capital allocation constraints, enabling the Company to advance its goal of returning capital to shareholders. Progress has been made regarding the re-constitution of Bonterra's banking syndicate and credit facility, which is scheduled to mature on November 30, 2022. The Company plans to provide an update when new banking arrangements have been finalized.
Key points:
- continue strengthen the balance sheet
- get a financial lending package :
1) free of restrictions on capital allocation
2) enabling ROC to shareholders
- "reconstituting" bank syndicate... meaning a reforming who the banks will be. Changing likely with the intent of getting banks who are open to oil industry and financing of BNE
- progress is ongoing
-announcements will be made when it is done... expect monthly extensions if the going gets tough... we saw this before...
I think getting rid of the restrictive ROC clauses will be a real challenge as I understand the restrictions are in place for both the bank line and BDC debt.
I expect that negotiations may drag on beyond the current Nov 30 expiry date...extensions could be granted monthly until a successful completion or until the issue become mute as the bank debt disappears by approx 10 million/month. At the end of Nov bank debt is likely to to be 50-60 million... under 50 million by Dec 31.
I suspect BDC is not open to relaxation of any restrictive covenants on ROC. Hence any change in bank debt covenants are of no benefit until BDC debt is paid out or they (BDC) relent on revising restrictive covenants.
it is conceivable that this situation drags on into Q1-23... even into May when the next AGM is held.
that scenario is the worst case I can see in the current market. I remember when both BNE and OBE were both extending their debt maturities monthly.
my best case scenario is a new syndicate, revised BDC debt with restrictive ROC being removed.
what's most likely is a series of extensions and some agreement on banking and no change to BDC.