Dome Petroleum sees a debt letup - if it can sell stock
Canada's heavily indebted Dome Petroleum says it has reached agreement with 54 lenders to reschedule $5.2 billion (Canadian) worth of its $6 billion outstanding debt.
But there's a catch: Dome has to raise $350 million in equity with a new stock offering. That may not be easy.
Improving stock market conditions in Toronto and New York could help the prospects. But the company's debt record and poor overall market performance have many analysts saying the issue will be hard to sell. Even Dome admits it may be. A final prospectus is expected by the end of the month.
Howard Macdonald, president of the Calgary, Alberta, oil and gas company, told a news conference in Toronto Wednesday there is a ''reasonable chance'' the issue will sell. He said the rescheduled debt will be repaid over a 12-year period extending to 1995.
Rising interest rates and a falling Canadian dollar make it more expensive for Dome to service its debt. Forty-one loans and 54 lenders are involved in the refinancing. Dome's original plan to restructure its debt met with opposition from banks, especially American banks.
Mr. Macdonald has contended the company has a strong underlying business but is struggling under its huge debt. Each percent-point jump in interest rates, he has said, costs the company $50 million a year. The debt is the result of a huge acquisition program several years ago.
Earlier this summer Macdonald told shareholders that ''our problem is financial and how to get out of this financial timing trap and how to get the debt down.''
Dome reported losses of $$369.3 million in 1982; 1.1 billion in 1983; and, in the first quarter of '84, $39.6 million.