Debt ills put Bow Valley up for sale

Bow Valley Energy Ltd. put itself on the auction block yesterday, weighed down by a fast-approaching deadline for paying down debt and a plunge in its stock market value in the midst of the global financing crunch.

The Calgary oil and gas explorer and producer, whose key projects are in the North Sea and Alaska, said it has appointed a committee of independent directors and hired Scotia Waterous Inc. to advise it on "strategic alternatives" that range from potential asset sales to a joint venture, merger or corporate sale transaction.

Bow Valley also said in a news release that it has separately hired Tristone Capital Inc. to help in the possible sale of all or part of its undeveloped Peik property in the North Sea. The company said it would use the proceeds from any such sale to reduce debt and bolster working capital.

The firm said it was taking these steps as "a consequence of [its] bank indebtedness maturities on Dec. 31, 2008, and the current global economic environment."

Bow Valley, whose market capitalization has plunged to just $43.3-million from more than $568-million last December as its share price plunged to around 50 cents from $6.56, owed its banks a total of $153.7-million at the end of the third quarter, and had a debt and working capital deficiency of $188.4-million.

Its shares fell again yesterday, dropping to as low as 43 cents before inching back up to 48 cents, down 3 cents from Thursday's close.

In releasing its quarterly financial results two weeks ago, Bow Valley said its existing sources of financing and cash flow from operations were not enough to meet a repayment of a £17.5-million ($33.3-million) loan due Nov. 15 or a $10-million (U.S.) payment due Dec. 31 on its $110-million senior debt facility.

The company also said its banks had agreed to extend the deadline on the $10-million payment to Dec. 31 from Dec. 15 and that they and the company were discussing a restructuring of the debt.

BOW VALLEY ENERGY (BVX)

Close: 48¢, down 2¢