Shares of Canadian Overseas Petroleum Limited (LSE:COPL, CSE:XOP, OTC:VELXF) experienced a significant rallied of around 40% in early trading on Thursday following the company’s announcement of an extension to its forbearance agreement with its primary lender.
The firm disclosed in a statement that the deadline for forbearance, previously set for February 29, has been postponed to March 8. This extension delays the immediate risk of a default.
COPL communicated to its shareholders that under the revised forbearance terms, the senior credit facility lender has consented not to exercise certain rights and remedies that could be triggered by the company’s defaults under the senior credit facility.
Despite this, COPL acknowledged its ongoing financial challenges, including a worsening liquidity situation, as detailed in recent company updates.
The company is actively exploring various strategic options, which may include some form of formal insolvency protection. However, it remains uncertain whether these measures will preserve any value in the company’s common shares.
In the London market, COPL’s shares saw an increase of just over 55%, trading at 0.070p, 09:37 pm.
