Circle Oil secures breathing space as debt repayments loom

Jessica Morris
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Egyptian fishermen sail close to Aker So
Circle has suffered late payments from Egypt's state-owned oil firm (Source: Getty)

Circle Oil was thrown a lifeline today, as it struggles with an increasingly uncertain financial situation.

The oil explorer, which recently halted trading of its shares, said that the World Bank's International Finance Corporation (IFC) kicked back a revaluation of its current borrowing agreement. It also delayed any repayments due under that arrangement to 5 August.

Read more: Circle Oil shares tumbles as it announces a strategic review

"IFC has indicated its willingness to consider further waivers as may be required to continue the strategic review process based on circumstances applying at the time of any application," Circle said in a statement today.

The Middle East-focused firm added that its balance sheet remains under "significant pressure" and there's been no sustained improvement in unpredictable payments from Egypt's state-owned oil company.

It's also been crippled by oil prices which fell from over $110 per barrel in June to below $27 in January.

Read more: Oil baron Algy Cluff warns Brexit could squeeze lending to distressed North Sea firms

Circle warned last month that shareholders will likely be wiped out after the review. It's mulling asset sales, a merger with another company, the sale of all its shares and raising additional capital through a share issuance.

The company's revenue slumped 54 per cent to $38.95m (£29.05m) for the year ended 31 December.

Its debt pile stood at $69.62m by the end of May 2016.

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