CALGARY, Jan. 1, 2016 /CNW/ - Argent Energy Trust ("Argent" or the "Trust") (TSX: AET.UN) today announced that Argent has not made the $2,572,500 and $2,047,500 semi-annual interest payments (collectively, the "Interest Payments") due on its 6.00% subordinated unsecured convertible debentures due June 30, 2018 and its 6.50% subordinated unsecured convertible debentures due December 30, 2018 (collectively, the "Subordinated Debentures"), respectively. The Interest Payments were due on December 31, 2015. The Subordinated Debentures are obligations of the Trust only, and are expressly subordinated to, among other things, ordinary trade debt of Argent and its subsidiaries.
As previously announced, Argent's banking syndicate has reduced the borrowing base under Argent's credit facility to US$45 million. Argent is currently US$65 million drawn on the credit facility, with an additional $1.3 million letter of credit outstanding. Given the borrowing base shortfall, Agent is prohibited by the terms of the credit facility from making the Interest Payments.
The Indenture governing the Subordinated Debentures provides a 30-day cure period in which Argent may make the Interest Payments. The failure to make the Interest Payments within the cure period will constitute an event of default under the Indenture.
In the event of a default under the credit facility, including the failure to pay the borrowing base shortfall within the previously announced 60-day cure period, the holders of the Subordinated Debentures are prohibited by the terms of the Indenture from taking any enforcement proceedings in connection with the Trust's failure to make the Interest Payments, until the default under the credit facility has been cured, waived or shall cease to exist.
Argent is continuing to work with the banking syndicate and to advance and explore all alternatives to provide the necessary liquidity and capital to the Trust based on the current commodity pricing environment, in order to be in a position to, among other things, make the Interest Payments. Argent can provide no assurance that financing alternatives will be successful or available on satisfactory terms.
About Argent Energy Trust
Argent is a mutual fund trust under the Income Tax Act (Canada). Argent's objective is to create stable, consistent returns for investors through the acquisition and development of oil and natural gas reserves and production with low risk exploration potential, located primarily in the United States. Material information pertaining to Argent Energy Trust may be found on www.sedar.com or www.argentenergytrust.com.
SOURCE Argent Energy Trust
For further information: Sean Bovingdon, President & CFO, Argent Energy Trust, (403) 770-4809; Steve Hicks, Chief Operating Officer, Argent Energy Trust, (281) 847-1888