Artumas Group again delays bondholders meeting, now set for June 25

By Jennifer Chiou

New York, June 12 - Artumas Group Inc. again announced a new date for a meeting of holders of its $10 million of 10.5% callable convertible bonds due 2009, its $35 million of 10% callable convertible bonds due 2010 and its $70 million of 6% senior unsecured convertible bonds due 2012.

The company said that after conferring with two-thirds of the bondholders, the meeting is now slated for June 25 instead of June 15. It had previously been delayed from May 29 because of discussions with holders and their representatives to allow for more time to submit proposals.

After receiving counterproposals from holders, the main changes from Artumas' original proposal relate to a reduction in the conversion price, thus giving holders a higher level of ownership in the company. In addition, new capital will come via a new senior secured convertible bond issue for $8 million.

Artumas said that the steering committee of the ad hoc group has provided a letter of intention, along with some bondholders, to commit funds to underwrite up to $5.5 million of the new bonds.

Initially, the company proposed that bondholders convert all of their securities into common shares. Holders of the $115 million total of bonds would have received $2,365,417 for interest up to June 11, a figure based on the then current exchange rate. Now, holders will receive $2,681,389 for accrued interest to June 24.

The bonds are convertible into Artumas' Oslo-listed common stock.

Following conversion of the bonds, now 3,018,762,988, instead of 752,664,417, new shares would be issued, making up 98.8% of the company's share capital. Existing shareholders hold 35,816,987 shares. If all bonds were converted, holders of the 10.5% bonds would hold 269,538,390 shares, holders of the 10% bonds would have 943,708,578 shares and holders of the 6% bonds would have 1,805,516,020 new shares, making up 8.8%, 30.9% and 59.1%, respectively, of Artumas' then outstanding shares.

As for the new $8 million of bonds, the conversion price will be set at NOK 0.0375.

The company previously said that in order to secure its funding requirements, it would be inviting certain existing shareholders, bondholders and new investors to participate in an up to $20 million to $30 million private placement of shares. The shares will be sold at a price not lower than NOK 0.25 apiece.

After the placement, Artumas would consider a subsequent offering of up to $10 million to shareholders who were not invited to participate in the private placement under the original proposal.

The company also is asking bondholders to waive their rights to declare defaults due to non-compliance.

The proposed conversion is subject to the private placement for at least $20 million of shares as well as shareholder approval at a June 29 meeting.

The company said that it intends to settle shares from the conversion and placement around July 2.

Artumas noted that it believes that this is in the best interest of all stakeholders because the company could have a clean balance sheet in order to raise new capital. The company added that this could also ensure that it avoids having to obtain creditor protection.

Norsk Tillitsmann ASA is the trustee.

Calgary, Alta.-based Artumas is an electricity producer targeting rural regions in Africa.

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