The future looks very uncertain for
and its close affiliate,
, as the two entities announced they are exploring "strategic
alternatives" for their business.
In a press release, the pair quoted CEO Mark Ellis as saying
that "we believe it is prudent to explore opportunities to
strengthen our balance sheet and ensure we have adequate
financial flexibility to manage through prolonged commodity
The companies have retained financial and legal services
companies to advise it in the process.
Lead company Linn Energy is heavily indebted, and not long
ago exhausted the borrowing available to it under a $3.6
billion credit facility loan.
Does it matter?
To say that Linn Energy and Linn Co. have been hit hard by the
sharp decline in
would be an understatement. Both are been deeply in the red
these days, while the former's long-term debt figure recently
crossed over the $10 billion mark (it had just under $2.2
billion in equity at the end of its latest reported
It's clear some help is very much needed, be it an
equity-for-debt arrangement of some kind, a takeover, or any
other type of deal that would keep the Linn family going. But
this is a bad time for oil companies to look for assistance, as
the crude price seemingly refuses to rise from the floor, and
investors are basically staying away from the sector.
At this point, of course, it's hard to say if and to what
degree the Linn Energy/LinnCo's search for "strategic
alternative(s)" will be successful. Regardless, their future is
sure to be affected dramatically. Ideally, the pair will be
able to salvage its collective finances enough to soldier on,
but that's assuming it can find a party or parties willing to
get involved in a tough and challenging situation.
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Instant Analysis: Linn Energy and LinnCo
"Exploring Strategic Alternatives"
originally appeared on Fool.com.
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