Dallas, Texas 07/14/2015 (Financialstrend) – Swift Energy Company (NYSE:SFY) plans to raise $640 million in loan financing to boost its cash balance have reportedly hit a snag. The energy company needs the cash as its liquidity levels come under pressure amidst oil prices plunging by more than 11% since the end of June.
The bone of contentions on the terms of the loan facility is investors demanding a 10.5% yield on the five-year debt, something that Swift Energy Company (NYSE:SFY) vehemently opposes according to people close to the talks.. The company reportedly needs the cash to repay its credit line that is to be terminated there after
Part of the new loan is to repay $247 million outstanding debt that resulted in the company’s credit line being slashed to $375 million from a high of $417 million. The remaining amount should cater for other fees, expenses and other general purposes expenses including working expenditures.
Swift Energy Company (NYSE:SFY) finds itself in the current financial debacle having posted a first-quarter loss of $477.1 million. The loss came as oil prices continued to plunge in the quarter a problem compounded by lower commodity prices and lower oil production.
However, the effects could have been far much worse had the effects not been offset by relatively higher natural gas production. Revenues for the quarter were down to $68.3 million down from a high of $144.2 million posted a year ago.
The recent poor showing on the financial front compounded with widened first quarter loss has seen the stock receive a ‘Sell’ rating from TheStreet research firm. There are concerns that weaknesses already depicted by Swift Energy Company (NYSE:SFY) could far outweigh strengths making it difficult for shareholders to generate any substantial value.
Weaknesses can be seen in areas of deteriorating net income with a high debt management risk that has already forced the company to pursue another debt to meet its financial obligations. Swift Energy Company (NYSE:SFY)’s return on equity is also relatively low compared to the industry’s average.