California Resources opted to not make a coupon payment due today to holders of one of its unsecured bonds, according to two sources familiar with the situation. The company has entered into a 30-day grace period, the sources added.
The E&P company also has a USD 72m interest payment due 15 June on its USD 1.8bn 8% second lien notes due 2022. If the company makes the payment, it risks violating the USD 150m month-end liquidity requirement it must comply with to make draws on its revolver, the Debtwire legal analyst team wrote on 26 May.
The second lien notes traded late last week at 2 cents on the dollar, compared to trades in the 2 to 4 range throughout May, according to MarketAxess. The USD 100m 5.5% senior unsecured notes due 2021 and USD 144m 6% senior unsecured notes due 2024 haven’t traded in size since early May, when they changed hands in the low single digits.
California Resources is weighing a Chapter 11 filing, with DIP financing of roughly USD 500m-600m, the Wall Street Journal reported on 13 May.
As of 30 April, the company is 4.3x levered through USD 4.88bn of total debt and USD 1.14bn of LTM adjusted EBITDAX.
California Resources did not respond to a request for comment.