The Motley Fool headline says it all: “Better Late Than Never.” The financial services company reported that shares of Stone Energy (NYSE:SGY) surged 20 percent at 9:45 a.m. Tuesday (by day’s end that had been cut to 9.4 percent) after the company disclosed that it would make the necessary payments to its lenders to remain in compliance with its financial obligations.
Only a month ago, as ABiz reported, Stone disclosed that it had decided not to make the $29 million interest payment on its senior notes due in 2022, confirming in a Securities and Exchange Commission filing that it was using the 30-day grace period to maintain its liquidity. At the time, Stone also disclosed that it was analyzing strategic alternatives to address its liquidity, including refinancing alternatives through a private restructuring, asset sales and even a prearranged bankruptcy filing.
The Lafayette-based independent oil and gas exploration and production company, one of numerous energy companies working with creditors to avoid bankruptcy after a severe decline in oil prices, has instead shifted gears and now says it will indeed make the interest payment to its bondholders. It also made the second borrowing base deficiency payment of $29.2 million to its lenders, the Motley Fool reports.
The story points out that Stone’s lenders haven’t been quite as lenient as lenders have been to other producers while emphasizing that the two lender payments does buy Stone some time.
However, the company still has a lot of work to do because its lenders aren’t backing down on their demands. Because of that, Stone Energy either needs a white knight to provide it with rescue financing or it has to sell assets and hope to get less than fire-sale prices in order to stay afloat.
The Motley Fool story is more upbeat about Stone’s future than Monday’s Real Money piece after Stone completed a 10-for-1 reverse stock split to maintain its listing requirements related to minimum share price — though it's important to note that the move does not cure Stone’s non-compliance with the NYSE average global market cap.
“I don’t see any way out for Stone Energy,” Real Money contributor Jim Collins said in an email Monday. “It looks like they are making tactical moves to prepare for a prepackaged bankruptcy. In that case, obviously, the equity would be worthless.”
Read the Real Money story here and the Motley Fool story here.