UPDATE: After Friday's market close Ultra Petroleum confirmed, via a filing with the Securities and Exchange Commission, that it elected to defer making a $26 million interest payment on its 6.125% senior 2024 note. The company has 30 days to make the payment or obtain a waiver before it will have committed an "event of default." Real Money's original post ran on Apr. 1 at 1:20 p.m. ET.
While energy-related stocks are getting hit on Friday as oil falls, Ultra Petroleum (UPL) is getting hit especially hard. Shares fell as much as 18% in late morning trading to $0.40, which may be due to $26 million in interest it owes on debt maturing 2024.
Troubles at the Houston-based oil and gas company are no secret. Its stock has been trading well-below $1 for some time and it received a delisting notice from the New York Stock Exchange last month. Ultra Petroleum's recently released financials also said there was "substantial doubt" about the company's ability to continue as a "going concern."
However, it appeared Ultra Petroleum may have been granted some breathing room as it continues to work with Kirkland and Ellis and other advisors in an effort to restructure its debt.
In March, Ultra Petroleum announced that it secured waivers to defer maturity and interest payments on most of its debts. The waivers terminate on Apr. 30. The first waiver applies to Ultra Petroleum's revolving credit agreement, under which it borrowed the full available amount of $999 million. The second waiver applies to $1.46 billion in senior notes coming due between March 2016 and October 2025.
Not included in the announced waivers is Ultra Petroleum's 6.125% senior note due 2024, which has interest has an interest payment due on Friday. Its 5.75% senior note due 2018 is also not covered. Representatives from Ultra Petroleum did not immediately respond to requests to comment.
In fact, both of the waiver agreements could be terminated if Ultra Petroleum makes interest payments on those notes -- creditors tend to dislike when borrowers pay one lender and not another. (As an example, look at the 15 year battle between Argentina and Elliott Management over the country's defaulted debt, as was recently reported by the Wall Street Journal.)
Also worth noting, much of Ultra Petroleum's cash on hand is from its final $266 million drawdown on its credit agreement, making a payment less likely.
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