Compton Petroleum makes changes to exchange offer for 7 5/8% notes

By Angela McDaniels

Tacoma, Wash., Sept. 7 - Compton Petroleum Corp. modified the exchange offer for its $450 million of 7 5/8% senior notes due 2013, according to a company news release.

For each $1,000 principal amount of 7 5/8% notes, holders were originally offered:

• $755.686 of cash and $184.314 principal amount of 10% senior mandatory convertible notes due September 2011 issued by Compton Petroleum Finance Corp.; or

• $940 principal amount of new 10% senior notes due 2017, also issued by Compton Petroleum Finance.

Under the terms of the modified offer, noteholders can elect to receive $940 principal amount of the new 10% notes due 2017 or $940 of cash for each $1,000 principal amount of 7 5/8% notes.

Compton will also pay accrued interest.

The company will issue no more than $193.5 million of new 10% notes due 2017 and pay no more than $184.5 million in cash. If either option is oversubscribed, noteholders will be subject to proration.

The $45 million of mandatory convertibles included in the cash alternative under the initial terms of the offer will instead be allocated in the prorationing process.

Assuming full proration of the consideration available under the offer - that is, all noteholders elect to receive new notes or all noteholders elect to receive cash - and assuming the amount of mandatory convertibles is not reduced, each noteholder would receive $430 principal amount of new 10% notes, $410 of cash and $100 principal amount of mandatory convertibles per $1,000 principal amount of 7 5/8% notes.

Compton reserves the right to replace some or all of the mandatory convertibles allocated in the prorationing process with new 10% notes and/or cash.

The company said that noteholders who already chose to receive cash and mandatory convertibles will instead receive cash, up to the $184.5 million limit. Noteholders who have previously made an election and wish to change their election may do so.

The deadline for submitting elections is 5 p.m. ET on Sept. 10.

The offer is part of the company's recapitalization plan, which includes a proposed plan of arrangement under the Canada Business Corporations Act.

"We have listened to the views expressed by some of our stakeholders, particularly regarding the mandatory convertible notes," president and chief executive officer Tim Granger said in the release. "These modifications will give us some flexibility to reduce or eliminate the amount of mandatory convertible notes that may be issued under the arrangement."

The recapitalization plan will require approval of two-thirds of the votes cast by holders of the 7 5/8% notes present at a meeting on Sept. 14. Each noteholder will have one vote for each $1 principal amount of notes.

The information agent is Mackenzie Partners, Inc. (212 929-5500, 800 322-2885 or tenderoffer@mackenziepartners.com).

Compton is an oil and gas exploration and production company based in Calgary, Alta.

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