Lightstream survives ‘painful’ restructuring with $1.3B deal

After struggling to pay its debts while oil prices tumbled, Calgary’s Lightstream Resources Ltd. emerged from a “painful” restructuring with a $1.3-billion deal that will clear the way for new production in 2017, the company says.

Two New York-based debt holders, private equity firm Apollo Global Management and credit-focused investor GSO Capital Partners, will own Lightstream following the deal, which includes swapping their debt for equity.

The transaction, expected to close Dec. 31, marks the end of a turbulent period for the mid-sized light oil producer after a commodity price rout worsened its debt troubles, a problem that crippled other companies. Chief executive John Wright said he managed to stay confident throughout the past year that Lightstream would avoid collapse, given its assets in several states and provinces, including Alberta, continued to generate significant revenues.

Still, management, directors and employees lost millions from their own investments in the process.

“This has been an education experience that I don’t wish on anyone,” Wright said in an interview on Thursday.

“We’re coming out of this with the company intact, the assets intact and the employees intact, ready to face another day.

“But we’ve wiped out all of our ownership position in the company, and it’s been painful for all of us.”

Wright said the company started down this path earlier this year when Lightstream’s banks reduced its available credit due to persistently low oil prices, handcuffing its ability to make interest payments to bondholders.

The company prepared a restructuring deal, but it failed to secure enough support from bondholders.

Lightstream later opted for a court-supervised sale, a process that led to the transaction with Apollo and GSO, a subsidiary of the investment firm Blackstone Group LP.

Thomas Matthews, an analyst at AltaCorp Capital, said Lightstream owns “coveted” light oil plays in Saskatchewan and Alberta, but its debt had “overwhelmed the value of the assets.”

Wright said he hopes to begin drilling new wells next year.