Gulf Keystone close to debt rescue deal

Gulf Keystone Petroleum, which was once a stock-market favourite company, moves forward to a controversial deal that will allow it to survive yet will make the investors list almost empty.

The firm was specialized in pumping oil from Kurdistan, and it was worth £3.6bn in 2012. However, after a series of unfortunate events, including the debts of the company and inability to of Kurdistan to pay for oil, the shares fell 99% in price, becoming 4.85p this Friday.

However, there’s always at least one way out, and the company is now working on it. Creditors have supported the firm by writing off about $575m (£430m) that will make them the majority of the share owners.

There’s also a plan to start a fundraising that might give the company about $40m to support their balance sheet. It is thought that a core of institutional investors have agreed to back the financing. The final figure is being negotiated this weekend.

The investors are betting that Gulf Keystone, shorn of its crippling debt burden, could recover strongly. Its Shaikan field produces 37,000 barrels a day, the Kurdish regional government has begun to make more regular payments and a new management team has banished the boardroom in-fighting that once plagued the producer. Gulf Keystone declined to comment.