Canada's Niko raises "going concern" doubt, shares plunge

Fri Nov 15, 2013 1:45pm EST
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By Garima Goel

(Reuters) - Canadian oil and gas producer Niko Resources Ltd (NKO.TO: Quote) lost more than half its market value after it raised "significant" doubt about its ability to continue as a going concern.

Niko said it was negotiating for a $340 million loan to avoid defaulting on debt payments and other obligations.

The company said it had a working capital deficiency of $110 million as of September 30, while its cash and cash equivalents had dropped to $55 million from $98.1 million a year earlier.

Niko had $734.5 million in total liabilities, including issued debt, loans and other obligations.

The company, which has been trying to restructure debt and refinance loans to fund drilling in India, said it would continue to focus on the D6 block off the country's east coast. Production from the block has been falling.

"They have about $100 million due within one year," Macquarie Research analyst David Popowich told Reuters.

"It looks like they will be able to pay it with this new debt facility but the problem is they also have to ramp up spending at the D6 block and there are other expenditures they are going to be on the hook for."

Niko shares plunged as much as 57 percent to a life-low of C$1.12 on the Toronto Stock Exchange on Friday when the company also announced its 10th straight quarterly loss.   Continued...