Sundance Energy Inc. (SNDE) is an onshore company in North America that explores and produces natural gas and oil. Shares of SNDE were down in pre-market after the company announced that it has filed voluntary Chapter 11 protection in the U.S. Bankruptcy Court. SNDE stock price saw a massive decline of 37.87% to drop at $1.46 in Wednesday’s pre-market as of this writing. Let’s understand more about this bearish sentiment.
Sundance Energy announced the filing of Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas on March 9, 2020. The company has taken this step to strengthen its balance sheet and to make a company in a better position for future endeavors. Sundance will get rid of over $250 million in debt obligations through this process. The company will continue to operate as usual without any interruption and the chapter 11 process will conclude in approximately 60 days.
Sundance’s prepackaged chapter 11 process to remove over $250 million debt from its balance sheet will help SNDE in financial restructuring and enable it to devise ways to sustain future success without paying a significant amount of debt. Moreover, Term Loan lenders have committed at least $45 million in debtor-in-possession financing to the company that will help the company in normal-course operation, operating cash flows, and reorganization expenses.
Sundance Energy expects to continue its normal operations without any interruption through the chapter 11 process. The company has filed customary motions to ensure its normal flow of operations including paying employees, existing benefiting programs, and paying royalty owners and vendors. The company is optimistic to get an approval of these customary motions in the initial days of Chapter 11.
SNDE stock faced numerous challenges in the past few years and COVID-19 has added more pain thus resulted in volatility and decreasing cash flows. Considering the bearish sentiment, the penny stock is still passing through a difficult time.