CALGARY – Oilsands producer Connacher Oil and Gas Ltd. has won court approval for a process to find a buyer or investor that could allow it to emerge from Companies’ Creditors Arrangement Act protection after nearly two years.
A court ruling Wednesday approves the Calgary-based company’s agreement with its first lien lenders — owed about $141 million — to launch a process that envisions a May 23 initial bid deadline and court approval of a transaction in July.
An attempt to sell the company soon after it filed for court protection from creditors in 2016 attracted several bids, but Connacher and its lenders ruled none was acceptable.
“In light of the company’s improved financial performance resulting from cost efficiencies realized during the CCAA process and the improvement in oil prices, Connacher believes that it is appropriate to exit from CCAA in the short term, either through a third-party sale or investment transaction or a creditor-driven restructuring,” it stated in a news release.
It added it has appointed investment bank Houlihan Lokey Capital Inc. to solicit proposals that will provide net sale or investment proceeds of at least $90 million, plus an amount sufficient to pay other claims with similar ranking to the first lien debtholders.
If no qualified bidder emerges, the company would be sold to its lenders in return for cancellation of some of what they are owed.
Justin Zammit, a vice-president with Los Angeles-based Houlihan Lokey, said he’s optimistic that a buyer can be found, adding marketing will expose the company to an international pool of potential investors.
“The market is much more favourable. There are still some challenges but we think the outlook is much better than it was in 2016,” he said.
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Companies in this story: (TSX:CLC)