West Perth-based Red Fork Energy, which has raised $125 million from investors over the past three years to support its shale drilling program in the US, has collapsed after losing the support of its major lender.
West Perth-based Red Fork Energy, which has raised $125 million from investors over the past three years to support its shale drilling program in the US, has collapsed after losing the support of its major lender.
Guggenheim Corporate Funding, which agreed last year to lend $US150 million to Red Fork, appointed Cliff Rocke, Martin Madden and David Winterbottom of KordaMentha, as receivers and managers.
The company announced late yesterday it had responded by appointing Ferrier Hodgson directors Martin Jones, Darren Weaver and Benjamin Johnson as joint administrators.
Its collapse follows the ASX twice asking the company last month to explain the decline in its share price and increased trading volumes.
The company’s last substantive announcement was its September quarter report, released on November 3.
It stated at that time that it was working towards a refinancing of its Guggenheim debt.
“Red Fork is now working with the preferred partner toward a successful closing of a new debt facility that would see the company’s existing secured loan repaid and additional working capital secured,” it said.
Red Fork also confirmed last month that development activities remained suspended pending the outcome of its review process, which commenced in April.
The company, which would have been adversely affected by the fall in oil pices, had previously disclosed that it was in breach of its lending covenants during 2014, but had obtained waivers so it could continue trading.
It was one of several Perth firms, including Antares Enegy and Sundance Energy, that were seekking to emulate the success of Texas-focused Aurora Oil and Gas, which was taken over this year in a $1.9 billion deal.
Red Fork advised on its review by Dallas firm Petro Capital Securities and Perth broker Euroz Securities, which had previously had a lead role on three capital raisings.
Red Fork raised $47.7 million in August last year at 43 cents per share, with Euroz Securities and Canaccord Genuity (Australia) acting as joint lead managers.
This followed a $50 million placement in August 2012 at 67 cents per share, with Euroz Securities being sole underwriter and lead manager.
Euroz was also lead manager for a $28 million raising in December 2011, at 69 cents.
The company’s main focus was the Woodford shale, located within its Mississippian acreage in Oklahoma.
The Guggenheim term loan was announced in November 2013.
New York-based Guggenheim had agreed to provide up to $US150 million, but in practice only advanced $US100 million, at an interest rate of LIBOR plus 8.5 per cent per annum.
This amounted to a doubling of Red Fork’s debt, as it replaced a $US45 million facility from F&M Bank.
Red Fork shares last traded at 0.6 cents, having peaked at well above $1.00 in 2012.
