Legacy Reserves (LGCY) Stock Is Up On Forbearance

Legacy Reserves LGCY Stock News

Independent energy company, Legacy Reserves Inc (NASDAQ: LGCY), is climbing in the market after announcing more forbearance agreements. The news comes less than a week after the stock rocketed on the first forbearance agreement announcement. So far today, LGCY is trading on gains of more than 25%.

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LGCY Stock Gains On Forbearance Agreements

In a press release issued this morning, Legacy Reserves announced that it has entered into a second forbearance agreement. In the announcement, the company said that it signed the a second round of forbearance agreements with lenders of its reserve based revolving credit facility and lenders of its second lien term loan.

The first set of forbearance agreements, announced about a week ago, were set to expire on June 7, 2019 at 5:00 p.m. ET.

In the release, LGCY said that under the second round of forbearance agreements, the lenders have agreed to extend the period of forbearance through June 12, 2019 at 11:59 p.m. ET. The agreements state that the leanders will forbear from exercising any and all remedies available to them in respect of a default arising from the company not making interest payments due on June 3, 2019. These payments are associated with the senior notes.

Also, the second lien lenders have agreed to extend their waiver of the covenant that required LGCY to deliver audited financial statements without a “going concern” or like qualification or exception.

A Deal In The Making

At first glance, the fact that lenders are holding off defaults isn’t great news. Ultimately, it means that the company is having a difficult time staying afloat. However, the fact that the lenders are being so patient here is a clue that something big may be on the horizons.

In the press release, Legacy Reserves reminded investors that it retained Parella Weinberg Partners and its affiliate, Tudor Pickering Holt & Co., as financial adivsors and Sidney Austin LLP as legal advisors. The goal of these hires was to assist the company in evaluating and exploring strategic alternatives, including, but not limited to, the sale of the company.

Considering that the lenders are allowing time to go by without default suggests that a deal may be just around the corner. Should the company be acquired, it could lead to an immediate increase in value for investors.

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What Do You Think?

Where do you think LGCY stock is headed moving forward? Share your opinion in the comments below!

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