ShaMaran poses financing plan under $150 million 11˝% five-year bonds; meeting set for April 1

By Susanna Moon

Chicago, March 14 – ShaMaran Petroleum Corp. said it has proposed a financing arrangement to holders of its $150 million of 11˝% five-year bonds to complete its share of investments this year to put the Atrush field into production.

The notes were issued Nov. 13, 2013 by General Exploration Partners, Inc., a wholly owned subsidiary of ShaMaran, which holds a 26.8% interest in the Atrush Block production sharing contract.

The arrangement will provide the company with additional liquidity of about $33 million in 2016, according to a company notice.

A meeting for bondholders has been set for April 1 in Oslo, which has been corrected for the bank holiday in Norway, according to a separate company correction. The company said in the original announcement that the meeting would be held March 30 in Oslo.

Under the financing terms, General Exploration would issue new $17 million super senior bonds, based on the same agreement as the existing bonds with the same maturity date of Nov. 13, 2018 and a coupon of 11˝%, payable in cash or in kind.

The company entered into an agreement to underwrite the super senior bonds with major shareholders, Lorito Holdings Sarl and Zebra Holdings and Investments Sarl, companies owned by the Lundin Family Trust.

The company said it will offer bondholders the option to convert up to $18 million of bonds at par into ShaMaran common shares at a market price following approval of the arrangement. The conversion offer will begin following approval of the arrangement, with pro rata allocation among bondholders if the offer is oversubscribed.

The bond agreement is to be amended so that the 2016 coupon interest of $17.25 million before considering any conversion is settled by issuing new PIK bonds; General Exploration has the option to pay in cash or in kind the post 2016 coupon interest; and some waivers and amendments are made to the terms of the existing bonds including the subordination of bonds’ security to the super senior bonds’ security.

The Atrush project is progressing according to plan with first oil targeted mid-2016, the company said.

ShaMaran is considering offering a subsequent private placement of shares for cash for the remainder if $18 million is not converted.

The Kurdistan-focused oil development and exploration company is based in Vancouver, B.C.

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