Russia’s Alliance Oil seeks to amend $350 million 9 7/8% notes due 2015

By Susanna Moon

Chicago, Feb. 9 – Russia’s Alliance Oil Co. Ltd. said it began a consent solicitation to amend its $350 million 9 7/8% guaranteed notes due 2015.

The consent fee for each $1,000 principal amount will be $10.00 for early consents and $3.00 for late consents, according to a company notice.

The early consent deadline is 5 a.m. ET on Feb. 13, and the solicitation will end at midnight ET on Feb. 27. Holders must be of record as of 5 p.m. ET on Feb. 27.

A meeting has been set for March 2 in London.

Settlement is expected to occur on March 3.

VTB Capital plc (+44 20 3334 8029 or email: vtb.dcm@vtbcapital.com) is the solicitation agent, and Lucid Issuer Services Ltd. (+44 207 704 0880 or email: allianceoil@lucid-is.com) is the tabulation and information agent.

The company has begun discussions with lenders to extend the maturity of short-term loans and expects to receive their consents in the near term, according to a company press release.

As of Jan. 30, the consolidated cash position of the issuer and its consolidated subsidiaries was about $228 million, with about $172 million attributable to the issuer. Out of this amount, about $65 million was locked at the joint ventures level with the group’s participation, the press release noted.

“Negative macroeconomic environment and budgeted capital expenditures for 2015 significantly limit such joint ventures’ ability to pay out dividends to their shareholders, and passing the locked cash to the shareholders requires a certain corporate restructuring and increase in equity capital of such joint ventures,” the press release said.

The rest of about $107 million will be used to cover working capital and other operating needs of the issuer, to cover expenses for the consent solicitation and to make the payment of coupon on the notes on March 11 as scheduled, the press release noted.

The group’s debt consists of a combination of the dollar- and ruble-denominated bonds and dollar- and ruble-denominated bank loans, most of which, other than the notes, are long-term, the company said.

The total amount of the group’s outstanding debt as of Jan. 1 is about $2,226,000,000, of which more than 60% is dollar-denominated. In 2015 about $595 million of the group’s debt is due for repayment, including $350 million under the 9 7/8% notes.

Loans maturing in 2015 were drawn last year for the development of the resource base and for finalization of the Khabarovsk Refinery modernization, as well as for construction on a connecting pipeline from the Khabarovsk Refinery to ESPO.

The average split between foreign currency and ruble portion in the group’s revenue is about 37% and 63%, respectively. Final maturity of the largest portion of the group’s remaining debt falls between 2018 and 2024.

Alliance Oil is a Moscow-based independent oil and gas company with vertically integrated operations in Russia and Kazakhstan.

© 2015 Prospect News.
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