The FTSE 250 oil company revealed it was in talks with a committee of its largest bondholders regarding the company's financial position and funding needs.
Afren said it was struggling amid a "significant dislocation" in the oil market, with the price of the black stuff crumbling 60 per cent since July last year.
If the oil and gas producer doesn't receive the cash injection it so desperately needs, or isn't taken over by Nigerian rival Seplat, then it will be forced to restructure its debt.
While Afren received a "highly preliminary" takeover approach from Seplat in December, there was no guarantee of an offer being made.
The company has already started talking to the banks behind a $300m (£199) debt facility about deferring a $50m (£33) payment which is due at the end of this month. It said it's considering using a 30-day grace period relating to $15m (£9m) of interest payments on bonds due Feb 1.
"Assuming the company's currency debt structure remains unchanged, there is an equity funding requirement which is likely to be significant and in excess of the company's market capitalisation," Afren said in a statement today.
"New funds will be required to meet interest and principal repayments, working capital and a reduced capital expenditure programme."
"[It] will be having discussions with its existing stakeholders and new third party investors regarding recapitalising the company."
The company's shares closed down 69 per cent at 5.5 pence at 4.30pm in London today. Earlier in the day they had fallen as low as 71 per cent.
Afren has so far failed to shake off a torrid 2014, during which it suffered as oil prices slid below $55 per barrel, and former chief executive Osman Shahenshah and former chief operating officer Shahid Ullah were fired for gross misconduct.