Kereco Energy starts tender for convertibles

New York, May 1 - Kereco Energy Ltd. said it began its tender offer to buy its C$70 million 4.75% convertible unsecured subordinated debentures due 2012.

The offer has been mailed to holders and will be open until 2 p.m. ET on June 4.

Kereco is offering C$950 per C$1,000 principal amount. Holders will not receive the interest payable on June 30.

Included in the offer is an opinion from Clark Valuation Services Ltd. that the fair market value of the debentures at Feb. 29 was in the range of C$887 to C$958 per C$1,000 principal amount and an exact value would be the midpoint of C$922.50 per C$1,000 principal amount.

The offer is subject to conditions including that at least 90% of the convertibles are purchased by Kereco.

The offer had been delayed after Kereco was unable to obtain a waiver of the requirement for an independent valuation. It had originally intended to mail the offer by the end of January.

The tender is intended to improve the efficiency of the company's balance sheet, which currently has both excess cash and an undrawn bank line.

Kereco is a natural gas exploration company based in Calgary, Alta.

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