Industry Context & Opportunity

SECAP pursues privately negotiated bank credit positions and/ or problem loan asset acquisitions.

  • The effects of the commodity price decline on the entire energy sector have been severe
    • Distressed oil & gas companies remain under significant pressure to address leverage issues
    • Access to capital remains limited
    • Companies with stressed balance sheets, regardless of asset quality, are being forced to take action
  • Banks increasingly under pressure from regulators to address energy exposure
    • The global energy loan market is over $400 billion
    • US and international banks highly exposed to the energy space
    • Write downs result in significant deterioration of tangible common equity position and impact earnings
    • Regulator focused on liquidity and covenants
  • Borrowing base redeterminations and result announcements are catalysts for further balance sheet restructurings
    • Leniency in borrowing base redeterminations has postponed worst distress scenarios for at risk companies
    • “Kicking the can down the road” approach unlikely to continue due to liquidity, commodity prices and regulatory concerns