Energy XXI Ltd fka EXXIQ

[Drugdoctor]

Denial of the warning signs is usually a big mistake for investors of a failing company.

Missing the debt payment, as I have repeated stated, is a HUGE RED FLAG.

Suspending the Preferred stock dividends is a HUGE RED FLAG

The company, with oilfields in South Louisiana and the Gulf of Mexico, also said in the filing that it may have to liquidate assets for less than their value on its balance sheet. It had a $1.3 billion loss in the second quarter ended Dec. 31.

Working on RESTRUCTURING OPTIONS is a HUGE RED FLAG

Energy XXI has been working with PJT Partners LP and Vinson & Elkins LLP on restructuring options, according to the filing.

Now what filing? Here it is..

We had total indebtedness of $3,258.2 million as of December 31, 2015 and taking into account the bond repurchases completed subsequent to December 31, 2015, we had total indebtedness of $2,508.5 million as of February 15, 2016. We expect to have substantial interest payments due on our outstanding bonds in the next twelve months, totaling $235.8 million. In addition, the majority of our outstanding indebtedness will mature within the next ten years, with a substantial portion coming due in the next five years. All of the factors described above have placed considerable pressure on our ability to pay the principal and interest on our long-term debt, satisfy our other liabilities, continue our development activities to maintain and grow reserves and our ability to refinance our debt as it becomes due.
As a result of the commodity price decline and the Company’s substantial debt burden, absent a material improvement in oil and gas prices or a refinancing or restructuring of our debt obligations or other improvement in liquidity, the Company believes forecasted cash and expected available credit capacity will not be sufficient to meet commitments as they come due for the next twelve months. This raises substantial doubt regarding the Company’s ability to continue as a going concern.
In February 2016, Energy XXI engaged PJT Partners as a financial advisor and Vinson & Elkins L.L.P. as a legal advisor to advise management and its Board of Directors (the “Board”) regarding potential strategic alternatives such as a refinancing or restructuring of our indebtedness or capital structure or seeking to raise additional capital through debt financing or equity issue at Energy XXI to address our liquidity issues and high debt levels. We cannot assure that any refinancing or debt or equity restructuring would be possible or that additional debt or equity financing could be obtained on acceptable terms, if at all. We are also focused on long-term recurring cost reductions and the identification of non-core assets for potential sale. We cannot assure that any of these efforts will be successful or will result in cost reductions or additional cash flows or the timing of any such cost reductions or additional cash flows.
As a result of the commodity price decline, we will continue to evaluate our ability to make the debt payments as they become due and to meet the additional supplemental bonding requirements of the BOEM and our surety companies’ requirements to provide additional cash collateral for such existing and future bonds in light of our liquidity constraints. On February 16, 2016, the Company elected to enter into the 30-day grace period under the terms of the indenture governing EPL’s outstanding 8.25% Senior Notes due February 2018 (the “8.25% Senior Notes”) to extend the timeline for making the cash interest payment to March 17, 2016. The aggregate amount of the interest payments is approximately $8.8 million. During the 30-day grace period, the Company will work with its debt holders regarding its ongoing effort to develop and implement a comprehensive plan to restructure its balance sheet.
8


ENERGY XXI GULF COAST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015
(Unaudited)
Note 2 — Liquidity and Capital Resources – (continued)
The election to enter into the 30-day grace period under the terms of the indenture governing EPL’s 8.25% Senior Notes constitutes a default; however, it does not constitute an Event of Default under the indenture governing our EPL’s 8.25% Senior Notes or the Revolving Credit Facility. As a result of this default, certain restrictions have been placed on the Company, including but not limited to, its ability to incur additional indebtedness, draw on the Revolving Credit Facility and issue additional letters of credit. The Company has 30 days to cure the default by making the required interest payment that was due on February 16, 2016. Alternatively, the Company may restructure the debt with its creditors. On March 17, 2016, if the interest payment default is not cured, the default would be considered an Event of Default and the trustee or the holders of at least 25% in aggregate principal amount of then outstanding 8.25% Senior Notes may declare the principal and accrued interest for all outstanding 8.25% Senior Notes due and payable immediately. An Event of Default would also trigger cross defaults in the Company’s other debt obligations. An Event of Default would have a material adverse effect on the Company’s liquidity, financial condition and results of operations.
Absent a material improvement in oil and gas prices or a refinancing or some restructuring of our debt obligations or other improvement in liquidity, we may seek bankruptcy protection to continue our efforts to restructure our business and capital structure and may have to liquidate our assets and may receive less than the value at which those assets are carried on our consolidated financial statements. The accompanying consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded assets or the amounts and classification of liabilities.

https://www.sec.gov/Archives/edgar/data/1343719/000114420416086252/v433517_exhx99x1.htm