Theolia bondholders to vote on restructuring of 2% Oceans at meeting

By Angela McDaniels

Tacoma, Wash., Dec. 30 - Theolia wants to restructure its €253 million of 2% Oceane convertible bonds due Jan. 1, 2014 and said holders of 65.5% of the convertibles have agreed to vote in favor of the restructuring at a meeting in early 2010.

The company also plans to raise up to €100 million through the sale of new capital to its shareholders through a rights issue or issuance of warrants. The first €40 million will be retained by Theolia to fund the development of its pipeline of projects, and the remainder will be used to fund an early partial repayment of the convertibles.

The convertibles have a put option on Jan. 1, 2012. Theolia expects to have difficulty borrowing or acquiring the funds needed to buy back the convertibles if this option is exercised.

As a precautionary measure, the company requested and obtained the appointment of a mandataire ad-hoc (special purpose trustee).

In addition, the board of directors retained the firm Ricol Lasteyrie as an independent financial expert to examine the financial conditions of the proposed restructuring and its impact. The bondholder meeting will be held after the expert gives its opinion.

The company said that a failure of the restructuring could force it to consider creditor protection under French law.

The proposed restructuring of the convertibles includes:

• The removal of the Jan. 1, 2012 put option;

• The extension of the maturity date to Jan. 1, 2041;

• The addition of a new put option on Jan. 1, 2015. The redemption price will depend on the amount raised through the capital increase and will range from 50% to 77.4% of the current redemption value, or from €10.97 to €16.99 per convertible;

• The early redemption of up to €60 million of the convertibles. The amount to be redeemed will depend on the amount raised through the capital increase;

• An increase in the coupon to 2.7%. It will then decrease to 0.1% on Jan. 1, 2015;

• An improved conversion ratio. The initial conversion ratio will be determined based on the amount raised in the capital increase. On Jan. 1, 2014, the conversion ratio will change to 80% of the initial conversion ratio;

• The removal of the bondholders' right to convert or exchange their bonds into shares beginning Jan. 1, 2015;

• A change-of-control clause that remains applicable, provided that it will allow every bondholder to request early redemption and that this clause will not apply in the event where a capital increase linked to the restructuring would trigger a change of control of Theolia;

• The removal of the temporary adjustment mechanism of the conversion ratio in the event of a tender offer for the company's shares; and

• The change of the new shares' issuance date upon the bonds' conversion that will from now on apply at the time of delivery and will be from their issuance entirely assimilated to the existing shares.

The completion of the restructuring plan is conditioned on bondholder approval, shareholder approval and the completion of the capital increase for €100 million. Under some circumstances, this amount can be decreased to a minimum of €60 million.

Approval is needed from at least two-thirds of the voting rights present or represented at the bondholder and shareholder meetings.

The company said it will enter into discussions with investors and banks in early 2010 to underwrite the capital increase.

Theolia develops and operates wind energy projects and is based in Aix-en-Provence, France.

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