MXenergy again prolongs deadlines in exchange offer for floaters

By Jennifer Chiou

New York, Sept. 4 - MXenergy Holdings Inc. once more pushed back the early consent deadline in the private exchange offer and consent solicitation for its floating-rate senior notes due 2011, this time to 5 p.m. ET on Sept. 17 from Sept. 3.

The early deadline had previously been set for Aug. 28.

The company also extended the offer expiration to midnight ET on Sept. 18 from Sept. 4 and, before that, Aug. 29.

As of midnight ET on Sept. 4, holders had tendered and not withdrawn about $154.9 million of the notes. Holders had tendered $157.9 million of notes at midnight ET on Aug. 29.

MXenergy again said it is extending the offer in order to provide additional time for ongoing negotiations with the contemplated provider of its proposed new credit, hedge and supply facilities.

The company had also been in discussions with the lenders under its existing revolving credit facility and primary natural gas hedge facility to obtain an extension beyond the Aug. 31, 2009 maturity date and to amend the triggering events in order to allow MXenergy to extend the exchange offer and consent solicitation beyond Aug. 31.

On Aug. 17, the company increased the payment on offer. For each $1,000 principal amount of notes exchanged, holders will receive $426.96 principal amount of a new series of senior secured notes due 2014, 213.75 shares of the company's newly created class A common stock, $138.15 in cash and accrued interest up to but excluding the settlement date.

The company will also pay a premium of $30.00 for each $1,000 principal amount of the notes tendered by the early deadline.

MXenergy was previously offering $393.33 principal amount of new notes, 188.91 shares, $138.15 in cash and accrued interest, plus the early premium.

The company also had amended some of the terms of the new notes being offered. It increased the coupon to 13.25% from 13%, added subordination provisions and made changes to the ranking of the new notes as well as intercreditor and security provisions.

The number of shares being offered represents 62.5% of the company's common stock, increased from 55%.

The minimum tender condition previously was increased to 95% of the notes from 90%.

MXenergy also already:

• Extended the deadline for closing the offer to Sept. 30;

• Updated the description of capital stock in the offering memorandum to include, among other things, class D common stock and special approval rights granted to the holders of the class A, class B and class C stock;

• Added the requirement that the company repay the existing credit facility with Denham Commodity Partners LP up to $12 million; and

• Added the requirement that all tendering noteholders execute and deliver the stockholders agreement, the notes registration rights agreement (as defined in the offering memorandum), the equity registration rights agreement and the class A voting agreement.

MXenergy is soliciting consents from the noteholders for proposed amendments that would eliminate or amend substantially all of the restrictive covenants and modify a number of the events of default and some other provisions, including the change-of-control provisions.

Consents are needed from holders of at least a majority of the outstanding notes.

Holders who wish to participate must tender all of their notes, and holders who tender will be deemed to have given consent.

The offer is conditioned on, among other things, the company refinancing and replacing its revolver and hedge facility, the company amending its current credit facility with Denham Commodity Partners, the conversion of MXenergy's series A convertible preferred stock into common stock, the creation of a management incentive plan and the receipt of any consents from government bodies or authorities that are required.

The new notes will be guaranteed by all of the company's subsidiaries that guarantee the existing notes. They will also be secured on a third-lien priority basis by substantially all of the assets of the company and the guarantors, provided that the new notes will have a first-priority security interest on a notes escrow account that will have cash, cash equivalents or government securities in an amount sufficient to make two semiannual interest payments.

The exchange offer and consent solicitation began June 29 and are being made only to accredited investors inside the United States and certain non-U.S. investors located outside the United States who have delivered an eligibility letter.

The information agent is Global Bondholder Services Corp. (866 387-1500 or, for banks and brokers only, 212 430-3774).

MXenergy is a retail natural gas and electricity supplier based in Stamford, Conn.

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