Echo Energy proposes restructuring on €20 million 8% secured notes

By Taylor Fox

New York, Feb. 22 – Echo Energy plc is proposing a restructuring of its €20 million 8% secured notes to be considered at a meeting of noteholders at 5 a.m. ET March 15, according to a news release.

The company is seeking noteholder consent to extend the maturity of the notes by three years to May 15 2025 and to remove all cash interest payment on the notes prior to the maturity date.

If approved by the required majority of noteholders, any and all interest on the notes accruing from Dec. 31, 2019 will be paid in cash on the new maturity date. However, from Sept. 30, 2021 noteholders will be able to,choose to receive note interest payments in respect of the immediately preceding quarter in new ordinary shares in the company.

Any new ordinary shares issued as a result will be issued at an effective issue price equal to the volume weighted average price of an Echo ordinary share for the 10 business days before the relevant interest conversion date.

Subject to the passing of the proposals, the company will make a payment to noteholders of €100,000, payable to noteholders voting in favor of the proposals pro rata to votes cast, to be satisfied by the issue of new ordinary shares in the company at an issue price equal to the average mid-market closing price per Echo ordinary share for the five days ended Feb. 18.

In connection with the proposed restructuring, Echo has agreed, subject to noteholder approval of the proposals at the upcoming meeting, that it will not without the prior consent of noteholders by way of a simple majority, drill an exploration well with a budgeted cost to the company in excess of €5 million for so long as the notes are outstanding and that it will not, in the last 18 months prior to the maturity date, make an acquisition of an interest in an oil and gas property, lease or license if the cash consideration for such acquisition exceeds €10 million.

Echo Energy is a London-based oil and natural gas holding company focused on South and Central America.

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