Monday, June 29, 2009

Cubic in a Jam

Cubic Energy, a small participant in the Haynesville Shale and partner of Chesapeake Energy in some acreage, released information this evening that the company has been notified by its chief lender Wells Fargo Energy Capital that it has reduced its borrowing base from $20 million to $7.5 million. The company was fully drawn on its line and therefore owes Wells $12.5 million. They have until September 1, 2009 and can pay it back in five installments, but it's not good news for Cubic. Obviously they are working on a debt restructuring, but that's an unenviable place to be in this market environment.

Additionally, Cubic was notified Friday by NYSE Amex, LLC that it is out of compliance with its exchange and faces possible de-listing (the company is traded on the American Stock Exchange). Cubic will submit a plan to regain compliance in a month and has until December 28, 2009 to prove that it is worthy of its AMEX listing.

A bad day all around for Cubic.

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