Compton Petroleum may issue new 10% notes, cash or 10% convertibles for its 7 5/8% senior notes

By Jennifer Chiou

New York, July 19 - Compton Petroleum Corp. announced a proposed plan for an exchange offer involving its $450 million of 7 5/8% senior notes due 2013.

The exchange is part of the company's three-step recapitalization, consisting of the completed $150.2 million of asset sales, an increase to and extension of its senior bank facility and the notes exchange.

In the exchange offer, Compton is offering a total of:

• $193.5 million of new Compton Petroleum Finance Corp. 10% senior notes due Sept. 15, 2017;

• $184.5 million of cash; and

• $45 million of Compton Finance 10% mandatory senior convertible notes due Sept. 15, 2011.

Under the terms of the plan of arrangement, holders will have the option of choosing for each $1,000 principal amount of 7 5/8% notes:

• $940, consisting of $755.686 of cash and $184.314 of the mandatory convertibles, subject to pro rationing based upon the maximum cash/conversion consideration; or

• $940 of new 10% senior notes.

If holders do not make a valid election, they will be deemed to have elected to receive the new senior notes.

Compton will also pay accrued interest.

Assuming full pro ration of the maximum cash/conversion consideration, each noteholder would receive $410 of cash, $100 of mandatory convertible notes and $430 of new senior notes for each $1,000 principal amount of existing 7 5/8% senior notes.

The recapitalization plan will require approval from holders of two-thirds of its 7 5/8% senior notes at a Sept. 14 meeting.

The effective date of the plan is anticipated for Sept. 15.

The exchange is set to end at 5 p.m. ET on Sept. 10.

The offer is contingent on the amendments to the company's senior bank facility.

Compton is a Calgary, Alta., oil and gas exploration and production company.

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