LAFAYETTE, La., Aug. 15, 2018 (GLOBE NEWSWIRE) — PetroQuest Energy, Inc. (the “Company”) (OTCQX:PQUE) announced today that, in order to preserve liquidity, it has elected not to make the semi-annual interest payments totaling approximately $14.2 million due on August 15, 2018 with respect to its outstanding $9.4 million principal amount of 10% Second Lien Senior Secured Notes due 2021 (the “2021 Notes”) and its outstanding $275.0 million principal amount of 10% Second Lien Senior Secured PIK Notes due 2021 (the “2021 PIK Notes,” and together with the 2021 Notes, the “Notes”). Non-payment of this interest is not an event of default under the indentures governing the Notes, but would become an event of default if the payments are not made within 30 days.
As the Company has previously disclosed, it is analyzing and evaluating various alternatives with respect to its capital structure, including its significant amount of indebtedness, liquidity and the aforementioned interest payments. These alternatives include private debt exchanges, asset sales, draws under the Company’s multi-draw term loan facility, alternative financing arrangements to replace the Company’s multi-draw term loan facility and filing for protection under Chapter 11 of the U.S. Bankruptcy Code. The Company does not intend to disclose or comment on developments related to its review unless and until the Company’s Board of Directors has approved a specific alternative or transaction or otherwise determined that further disclosure is appropriate. The Company cannot provide any assurance that any of the alternatives being evaluated will provide additional liquidity or enable the Company to refinance its outstanding indebtedness.
Upon an event of default under the indentures governing the 2021 Notes and the 2021 PIK Notes, the trustee or holders of at least 25% in aggregate principal amount of the 2021 Notes or the 2021 PIK Notes then outstanding may declare the principal amount of the 2021 Notes or the 2021 PIK Notes, respectively, plus accrued and unpaid interest, to be immediately due and payable. The Company has entered into a forbearance agreement with the lenders under the Company’s multi-draw term loan facility with respect to certain cross defaults resulting from the election not to make the interest payments with respect to the Notes. The forbearance will terminate upon earlier to occur of 11:59 p.m. ET on September 14, 2018 or the occurrence of any specified forbearance default, which includes any other event of default under the Company’s multi-draw term loan facility or any breach by the Company of the forbearance agreement.
As of August 1, 2018, the Company had $32.5 million of borrowings outstanding and $13.5 million of available borrowings under the Company’s multi-draw term loan facility. However, at the present time, the Company expects that it will not be able to utilize such available borrowings due to its inability to comply with certain covenants with respect to borrowings under the facility. The Company is continuing to pay suppliers and trade creditors and fund current operations on an ongoing basis.
The Company has retained Seaport Global Securities as its financial advisor and Porter Hedges LLP as its legal advisor to assist the Board of Directors and management team in analyzing and evaluating the various alternatives with respect to its capital structure.
About the Company
PetroQuest Energy, Inc. is an independent energy company engaged in the exploration, development, acquisition and production of oil and natural gas reserves in Texas and Louisiana. PetroQuest’s common stock trades on the OTCQX market under the symbol PQUE.