Quicksilver Resources may seek bankruptcy protection

Less than a week after laying off 10 percent of its workforce, Quicksilver Resources announced Tuesday that it may be on the road to seeking Chapter 11 bankruptcy protection after deciding to skip a crucial debt payment.

Quicksilver announced it was not making a $13.6 million interest payment that was due Tuesday. The payment was tied to senior notes that come due in 2019. Under the terms of the debt, Quicksilver has 30 days to make the payment before it goes into default, the company said.

If the company does not make the payment at the end of the grace period, the trustees or holders of at least 25 percent of the bonds may ask to be paid for the principal and the interest owed, triggering defaults under the terms of other Quicksilver debt, the company stated.

While the company has hired outside help to restructure its debt, there are “no assurances” that it will be successful and could prompt the company to seek bankruptcy protection, something officials have avoided mentioning in previous announcements about its financial woes.

“The company believes it is in the best interests of its stakeholders to continue to focus on actively addressing the company’s debt and capital structure and intends to continue discussions with its creditors during the 30-day grace period,” a company announcement said.

David Erdman, director of media and investor relations, could not be reached for comment.

The oil and gas exploration company has been fighting off challenges from lower natural gas prices and mounting debts for years.

Last week, Erdman said the company, which had about 350 employees in the United States and Canada, was laying off the employees to align “with our expected activity levels.” He declined to tie it to the company’s mounting financial problems.

Quicksilver officials said during a May 2014 conference call that its debt was at $1.99 billion.

The company has hired Houlihan Lokey Capital and Deloitte Transactions and Business Analytics along with other advisors to assist with evaluating its options to address its “near-term debt maturities, enhancement of its liquidity position and evaluation of strategic alternatives.”

Since there is no guarantee that Quicksilver will be successful in doing so, “the company may need to seek voluntary protection under Chapter 11 ... to restructure its capital structure,” a statement said.

In January, Quicksilver was kicked off the New York Stock Exchange when the average price of its stock fell below $1 for more than 30 days. When it was delisted, it was selling for 15 cents a share.

This story was originally published February 17, 2015 at 8:12 PM with the headline "Quicksilver Resources may seek bankruptcy protection."