LinnCo LLC (NASDAQ:LNCO) has announced that it would be granting another week to shareholders of Linn Energy (LINE), to exchange their shares of LINE for LNCO. The two companies are based in Houston and had worked out a master limited partnership structure, to help LINE unit holders, in the event of a forced restructuring of debt. It should be noted here that analysts believe the two companies to be equally troubled.
Although the purpose of the agreement was to help shareholders of LINE to avoid debt income cancellation, the shareholders have been warned to consult with their respective tax consultants before proceeding. The two companies had initially planned to close the offer on April 18, but later decided to extend by another 7 days. It should be noted here that a total of 55.5 million shares of LINE were tendered for exchange, on Friday alone. The two companies have also been exercising a 30-day grace period, to make payments on its Notes Payable.
The process has been initiated, as the company looks for strategic alternatives to improve its balance sheet. Further discussions are underway, with financial and legal advisors of the company, as it looks to reduce its debt. LINN and Berry Petroleum, the parent company, intends to opt for restructuring of the organization, while ensuring that long-term liquidity needs are met in the process. Furthermore, the company has also revealed that it has received certain waivers from creditors, on certain debts.
The waivers, more than anything, buys LINE and LNCO some extra time, to get their affairs in order and look for other alternatives to its dilemma. One of these major creditors was Wells Fargo Bank, which has agreed that certain events will not become defaults, until May 11, 2016.
LinnCo LLC (NASDAQ:LNCO) experienced a trade volume of 3.11 million shares, during the April 18 trading session, to reach a close at a share price of $0.41, after losing 12.77% of its share value.