PA Resources bondholders grant waiver for proposed recapitalization

By Susanna Moon

Chicago, Nov. 30 - PA Resources AB said that holders of its Swedish bond loan have granted the company a waiver at a Friday meeting.

PA Resources sought the waiver because of its proposed recapitalization, announced on Nov. 7, through which it intends to boost the group's equity, according to a company press release.

The waiver, like the one obtained for the Norwegian bond loan, is conditioned on shareholder approval, the release noted.

The company said on Nov. 7 that its board of directors decided to allow holders early conversion of their bonds due 2014, which would allow the company to bolster its financial position.

The early conversion requires shareholder approval at a meeting to be held on Dec. 7.

The company also previously said that its board planned to propose a subsequent fully underwritten rights issue for about SEK 700 million. Gunvor Group intended to participate for SEK 200 million.

The subscription price was set at SEK 0.15 per new share, meaning each convertible bond entitles the holder to subscribe for 116 new shares through set-off of an amount of SEK 17.40 per convertible bond.

The amount corresponded to the nominal value of the convertible bond plus accrued interest as of Nov. 6.

The total nominal value of the convertibles, including accrued interest, was SEK 1,072,000,000.

Several large bondholders, whose holdings total more than 40% of the outstanding convertibles, support the proposed transactions and plan to participate in the offer, according to a previous release.

The offer was subject to the underwriting agreement entered into with Carnegie Investment Bank AB not being terminated, which would happen if the offer failed to reach an acceptance level of more than 90% of the total nominal amount of the convertible bonds, the release noted.

The board also proposed authorizing a subsequent rights issue for about SEK 700 million at a subscription price of SEK 0.10 per new share. The rights issue was conditioned on completion of the offer.

The right to subscribe for new shares in the rights issue will be distributed by about 50% to the current shareholders in the company and the remaining half to shareholders who have obtained shares through set-off of convertible bonds in the offer.

The offer and the rights issue would boost equity by about SEK 1,576,000,000, while reducing net debt by about SEK 1.5 billion, according to the release.

PA Resources is an oil and gas company based in Stockholm.

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