Bonanza Creek Energy Inc (NYSE:BCEI) is 26% lower today after the company filed an 8-K stating that its borrowing base under credit agreement was reduced to $200 million from $475 million. Because the company had $288 million in borrowings outstanding, Bonanza Creek Energy Inc (NYSE:BCEI) as of May 2016 has a borrowing base deficiency of $88 million. The company has the following options to address the deficiency:
(A) within 20 days after the Deficiency Notice Date, deliver to the Administrative Agent written notice of the Company’s election to repay Advances such that the Borrowing Base Deficiency is cured within 30 days after the Deficiency Notice Date; (B) pledge, within 30 days after the Deficiency Notice Date, additional Oil and Gas Properties acceptable to the Lenders, which the Lenders deem sufficient in their sole discretion to eliminate the Borrowing Base Deficiency; (C) within 20 days after the Deficiency Notice Date, deliver to the Administrative Agent written notice of the Company’s election to repay Advances in six monthly installments equal to one-sixth of the Borrowing Base Deficiency, with the first such installment due 30 days after the Deficiency Notice Date and each following installment due 30 days after the preceding installment; or (D) within 20 days after the Deficiency Notice Date, deliver to the Administrative Agent written notice of the Company’s election to combine the options in clause (B) and (C) above, and indicating the amount to be repaid in installments and the amount to be provided as additional Collateral.
Hedge fund interest in Bonanza Creek Energy Inc (NYSE:BCEI) shares was flat at the end of last quarter and the stock didn’t manage to capture the attention of many investors. This is usually a negative indicator. At the end of this article we will also compare BCEI to other stocks, including Jason Industries Inc (NASDAQ:JASN), Mesabi Trust (NYSE:MSB), and Alimera Sciences Inc (NASDAQ:ALIM) to get a better sense of its popularity.
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At Q1’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions). The next page takes a closer look at which funds held shares of Bonanza Creek Energy heading into the second quarter.