Circle Oil shares fell 20.2 per cent to 2.10p this afternoon, after the embattled oil and gas explorer said it had appointed a Investec Bank to conduct a strategic review.
The Aim-listed firm said it had extended the redetermination of its $57.5m reserve based lending facility with the International Finance Corporation to 15th April, with any repayments suspended until that date.
Circle added that the IFC would consider further waivers if they're needed to continue the strategic review.
It expects the loan will be reduced and warned this could give rise to a shortfall. The loan's value is based on the value of Circle's reserves, which have depreciated amid tumbling oil prices.
In the meantime, the review will consider possible asset sales, a merger with another company, the sale of all its shares and raising additional capital through a share issuance.
"The agreement we have reached with IFC ... is a welcome development and one which gives us the headroom to progress the strategic review and to put in place a sustainable long term financing structure for the business," Mitch Flegg, chief executive of Circle, said.
"Circle has excellent assets across our regions of operation and our aim, mindful of the sustained low oil price environment and the Company's stressed financial position is to maximise the value from these assets for the benefit of all stakeholders."
Circle said its cash flows and financial position remain under significant pressure, mainly due to tumbling crude prices and impacts relating to payments for oil produced in Egypt.
It had cash of $10m as of 31 December, and receivables from Egypt and Morocco of $21.6m. Its total debt position is $77.5m and there is a further $14.1m in trade credits.