August 2, 2016 Comments (0) Blog, Current Investigations

Investor Alert: IronGate Energy

(Last Updated On: September 20, 2016)

Have you suffered losses investing in Irongate Energy  11% 07/01/18 bonds? If so, The White Law Group may be able to help.

According to their website, Irongate Energy supplies an extensive range of conventional, premium and specialized rental equipment for both onshore and offshore operations throughout North America. Services include installing casing and tubing, breaking out drill pipe, retrieving production tubing for both onshore and offshore drilling and workover operations.

In 2013, IronGate Energy Services  completed an offering of secured notes IronGate Energy 11% 07/01/18 to raise capital. Proceeds were to be used to fund the LBO of Archer Limited’s North American Rental and Tubular division by Clearlake Capital Group, for roughly $244 million.

In January Moody’s Investors Services downgraded IronGate Energy Services, LLC’s  Corporate Family Rating to Ca from Caa2, Probability of Default Rating to Ca-PD from Caa2-PD, and senior secured notes rating to Ca from Caa2. The downgrade reflects Moody’s expectation that the company will need additional external financing to continue operating in 2016. The Speculative Grade Liquidity Rating was affirmed at SGL-4, and the outlook is negative.

July has already produced $2.2 billion in defaults, with more than half from the energy sector. Drilling and equipment rental services activity have remained depressed in 2016 such that IronGate could not generate sufficient operating cash flow to cover its interest payment obligations in July. The outlook is not bright for Irongate Energy.

Sierra Income Corp, a non-traded BDC that The White Law Group has been investigating for some time, has invested a portion of their portfolio in IronGate Energy. For more information on Sierra Income Corporation, click here.

High-yield bonds—also called non-investment-grade bonds, speculative-grade bonds, or junk bonds—are bonds that are rated below investment grade, typically ‘BB’ or lower by Standard & Poor’s and ‘Ba’ or lower by Moody’s. They pay high yields to bondholders because the borrowers credit ratings are less than pristine, making it difficult for them to acquire capital at an inexpensive cost. Junk bonds carry an above average risk that the issuer will default on the bond. The increased risk makes them arguably unsuitable for many investors.

Brokerage firms that sell such products are required to perform adequate due diligence on the investments to ensure a reasonable likelihood of success, and to evaluate whether the investments are suitable in light of the client’s age, net worth, investment experience, and investment objectives. Firms that fail to perform adequate due diligence, or that make unsuitable recommendations, can be held responsible for losses in a FINRA arbitration claim.

If you suffered losses investing in Irongate Energy bonds or Sierra Income Corporation and would like a free consultation with a securities attorney, please call The White Law Group at 888-637-5510.

The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida. For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.