Energy XXI Gulf Coast again extends exchange offer for 10% notes

By Susanna Moon

Chicago, Oct. 19 - Energy XXI Gulf Coast, Inc. said the deadline was extended for exchange offer and consent solicitation for its 10% senior notes due 2013 to midnight ET on Oct. 20 from Oct. 16.

As of Oct. 16, investors had tendered $574,708,000 principal amount, or 92%, of the notes, which is unchanged from Oct. 14.

The company already said it extended the expiration date in order to provide time to resolve comments received from the staff of the Securities and Exchange Commission on its application to qualify the proposed indenture governing the new notes to be issued in the offer.

The offer was previously extended from Oct. 14, Oct. 9, Oct. 7 and Oct. 2.

Energy XXI is offering newly issued 16% second-lien junior secured notes due June 15, 2014 in exchange for up to $347.5 million principal amount of the 10% notes.

The company is also soliciting consents from noteholders to modify some restrictive covenants in the indenture to permit the issuance of the 16% notes. A tender of notes will constitute consent in favor of the proposed amendments. The adoption of the amendments requires the consent of holders of a majority of the 10% notes.

Energy XXI said it will issue $800 of new notes for each $1,000 principal amount of 10% notes. The payment includes a $50 premium for notes tendered by the early tender date, which was 5 p.m. ET on Sept. 18.

When the offer began on Sept. 4, Energy XXI said it will issue up to $338 million of the 16% notes in the exchange offer and a concurrent private placement, which meant a maximum of $360 million of 10% notes could be accepted in the exchange offer, and that the exchange offer's cap could be lowered depending on the amount of notes to be issued in the placement.

On Sept. 21, the company announced that it had entered into a purchase agreement with some institutional investors for a private placement of $60 million principal amount of the new 16% notes and 13,224,720 shares of the common stock of ultimate parent company Energy XXI (Bermuda) Ltd., and the maximum amount of 10% notes to be accepted in the exchange offer was lowered to the current $347.5 million.

The 16% notes issued in the exchange offer will be designated series A notes, and the 16% notes issued in the private placement will be designated series B notes. The two series will initially bear different Cusip numbers but will otherwise have the same terms.

The 16% coupon on the new notes consists of 14% payable in cash and 2% payable in kind.

The notes will be guaranteed by direct parent Energy XXI USA, Inc., Energy XXI (Bermuda) and each of the company's subsidiaries.

The offer is conditioned on the receipt of tenders for at least $311 million principal amount of 10% notes, the receipt of the needed consents, the company having closed on the sale of at least $50 million of the new 16% notes in the private placement and the receipt of an amendment or waiver under its first-lien credit agreement such that the exchange offer and private placement will not be prohibited under the terms of the facility.

The credit agreement amendment has been granted, the company previously noted.

Energy XXI (Bermuda) is a Bermuda-based independent oil and natural gas exploration and production company. Energy XXI Gulf Coast is based in Houston.

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