Swift Energy Co. (NYSE: SFY) stated Dec. 1 that, although it has current liquidity sufficient to make the $8.9 million semi-annual interest payment due Dec. 1 on its outstanding $250 million principal amount of 7.125% senior notes due 2017, it has elected not to do so. Non-payment of this interest is not an event of default under the indenture governing the notes, but would become an event of default if the payment is not made within 30 days.
As the company has previously disclosed, it is engaged in ongoing negotiations with a group of holders of its outstanding senior notes (including the notes) regarding restructuring those senior notes, along with possible avenues for increasing its near-term liquidity, with no understanding reached to date. The outcome and timing of the negotiations cannot be predicted at this time.
Upon an event of default under the notes indenture, the trustee or holders of not less than 25% in aggregate principal amount of the notes then outstanding may declare the principal amount of the notes plus accrued and unpaid interest to be immediately due and payable. An event of default under the notes would also result in cross defaults under the company’s other outstanding senior notes and its revolving credit facility.
As of Nov. 30, outstanding borrowings (including outstanding letters of credit) under the company’s revolving credit facility totaled $330 million. Swift Energy is continuing to pay suppliers and trade creditors and fund current operations on an ongoing basis.
Swift Energy has retained Lazard to advise the company’s management and board of directors with respect to realigning its balance sheet, in addition to addressing financing alternatives and enhancing its liquidity profile. The company has also hired the law firm of Jones Day to serve as its restructuring counsel, and Alvarez & Marsal North America LLC to serve as the company’s financial advisor.
Swift Energy, founded in 1979 and headquartered in Houston, engages in developing, exploring, acquiring, and operating oil and gas properties, with a focus on the Eagle Ford trend of South Texas and, to a lesser extent, the onshore and inland waters of Louisiana.