OKEA asks to use remaining escrow funds for acquisition

New York, June 20 – OKEA AS is asking holders of its $150 million of 7˝% callable senior secured bonds due 2020 to allow it to use the remaining amount of the $110 million of proceeds that are held in escrow for an acquisition.

The issuer is also seeking to make changes to the bonds’ covenants and other adjustments, according to a notice.

OKEA has agreed to acquire licenses from A/S Norske Shell for a total of NOK 4.52 billion.

To finance the transaction, the company will issue $180 million of new bonds and raise $130 million from an equity offering.

By the time the acquisition closes, OKEA estimates $50 million of the $110 million of proceeds from the original bond issue that are held in escrow will have been used for development of its Yme licenses.

Since the company’s Draugen and Gjoa licenses are producing enough cash flow to cover all of OKEA’s current development needs, including Yme, the company is asking bondholders to allow it to use the remaining escrow funds to help fund the acquisition of the Norske Shell licenses.

Holders of 85% of the bonds have agreed to support the changes.

Votes for the written resolution are due by 7 a.m. ET on June 27.

OKEA is a Trondheim, Norway-based oil and gas company.

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