Laricina Energy has missed its bitumen production covenant for the fiscal quarter ending Dec. 31, 2014 under the terms of the trust indenture relating to the $150 million in secured notes issued to a subsidiary of the Canada Pension Plan Investment Board (CPPIB).
Missing this production covenant is an event of default for which there is no cure period under the indenture. As a result, the notes are required to be reclassified as a current liability at Dec. 31, 2014 which causes the company to be in default of a related working capital covenant under the indenture.
The notes were issued to CPPIB Credit Investments Inc., a wholly-owned CPPIB subsidiary, in March 2014. The notes are fully secured against the assets of the Calgary-based company.
Laricina is in discussions with CPPIB on a potential remedy to the defaults under the indenture.
The company cautions that there are no assurances that an agreement with CPPIB will be achieved and the failure to reach an agreement may result in the inability for the company to operate as a going concern.
CPPIB also has an equity investment in Laricina, which it made in 2010.
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