Transmeridian releases further details on planned exchange offer for 12% notes

By Angela McDaniels

Tacoma, Wash., June 18 - Transmeridian Exploration Inc. said holders who exchange their 12% senior secured notes due Dec. 15, 2010 under a planned exchange offer will receive cash for 10% of the exchanged notes and new senior notes for the remaining 90%.

As previously reported, an exchange offer and consent solicitation is planned for the notes in connection with a $215 million investment from United Energy Group Ltd. The notes were issued by Transmeridian's British Virgin Islands subsidiary - also named Transmeridian Exploration Inc.

The new notes would have the same coupon, maturity and security package as the 12% notes but would eliminate the change-of-control tender offer that would otherwise be required in connection with the United Energy investment, according to a company news release.

Noteholders will also be asked to consent to proposed amendments to the indenture and waivers that will allow the transaction with United Energy to occur. Holders who exchange must submit consents.

The exchange offer and consent solicitation will be conditioned on the receipt of tenders and consents for 90% of the notes. In turn, the transaction between Transmeridian and United Energy is conditioned on the successful completion of the exchange offer and consent solicitation.

United Energy plans to make a cash infusion to Transmeridian and to acquire at least 90% of its 15% senior redeemable convertible preferred stock and 20% junior redeemable convertible preferreds. It will also receive new preferreds and warrants to purchase common stock, representing about 60% of the capital stock of Transmeridian on an as-converted, fully diluted basis.

Transmeridian is a Houston-based energy company that acquires and develops oil reserves in the Caspian Sea region.

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