Rocksource seeks bondholder OK to amend terms of floaters due 2012

By Angela McDaniels

Tacoma, Wash., Oct. 3 - Rocksource ASA is seeking bondholder approval to change the terms of its NOK 182.5 million of outstanding floating-rate notes due May 4, 2012, according to a bondholder notice from trustee Norsk Tillitsmann ASA.

Bondholders will vote on the proposal at a meeting at 8 a.m. ET on Oct. 11 in Olso.

The proposal includes the following:

• The maturity date will be extended to May 4, 2013. However, the maturity date will be accelerated to Feb. 1, 2013 if the company has not raised at least NOK 50 million of new equity by this date;

• The interest rate will be increased to Nibor plus 700 basis points from Nibor plus 500 bps;

• The net proceeds of any asset sales will be split 65% to the bondholders and 35% to the company. The portion allotted to the bondholders will be applied to the redeem the bonds at 104% of par plus accrued interest.

• The bonds will be granted additional security;

• The company will not invest in additional licenses outside the Norwegian Continental Shelf unless that investment is financed by additional equity or through asset sales;

• The denomination of the bonds will be changed to NOK 1 from NOK 500,000;

• All redemptions will be made on a pro rata basis; and

• A non-call provision will apply once the conditions precedent are met.

At least half of the outstanding bonds must be represented in person or by proxy at the meeting, and the holders of at least two-thirds of the bonds represented at the meeting must vote in favor of the proposal in order for it to pass.

If the changes are approved, the company will redeem NOK 60 million of the bonds at par plus accrued interest no later than five days after the conditions precedent are met. The company said it plans to redeem the remaining outstanding amount of the bonds as soon as possible.

The conditions precedent are the approval of the proposal by the bondholders, the execution of the amendments to the bond agreement and the trustee's satisfaction that a Norwegian Continental Shelf exploration credit facility agreement for 2012 is fully committed by a reputable bank.

Rocksource said the proposal is supported by the largest holders of the bonds.

Bondholders can contact the company's financial adviser, Pareto Securities AS (47 22 87 87 70), with questions.

Rocksource is an independent oil and gas company based in Bergen, Norway.

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