Warren Resources Misses $7.5M Debt Payment, 30-Day Clock Ticking

Warren Resources, a small, independent exploration and production company with an ongoing drilling programs in California, Wyoming, and in the northeast Pennsylvania Marcellus Shale, announced yesterday they won’t (for now) make a $7.5 million in payments due on IOUs (i.e. notes) that are due to be made this month. Even though they claim to have enough money in the bank. Big red flag. Instead, Warren has hired investment bank Jeffries LLC to help the company with “potential restructuring of its balance sheet” and the company has “initiated restructuring discussions with representatives of the creditors under its first and second lien credit facilities.” Restructuring is a cheaper and (if you can swing it) better alternative than bankruptcy. The question is, will Warren’s restructuring be enough to keep the company out of bankruptcy proceedings? The terms of missing the payment allow a 30-day grace period before bad stuff begins to happen. The clock is ticking…

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