Energy XXI Ltd., which warned about a potential bankruptcy filing just a week ago, has told investors it plans to pay $8.8 million of overdue bond interest before a grace period expires this week, according to a person with knowledge of the matter.
The struggling oil driller, which hired restructuring advisers PJT Partners and Vinson & Elkins, is continuing talks this week with creditors about how to restructure about $2.9 billion of debt, said the person, who asked not to be identified because the negotiations are private.
A spokesman for Energy XXI declined to comment.
Houston-based Energy XXI has struggled under the weight of its debt load amid a plunge in oil prices. It suspended dividend payouts on preferred shares last month. The company, which has been talking to investors about exchanging some of their debt to cut its total liabilities, hasn’t been able to get the transaction done.
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The company skipped a Feb. 16 interest payment on $214 million of 8.25 percent unsecured notes, entering a 30-day grace period to make the payment or face default. It warned in a March 7 regulatory filing that, absent a material improvement in oil and gas prices or a debt restructuring or other deal that improves its liquidity, it may seek to file for bankruptcy protection.
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