Sea Production seeks approval to extend $130 million bonds until 2015

By Susanna Moon and Angela McDaniels

Chicago, March 7 - Sea Production Ltd. is seeking bondholder approval to extend its $130 million floating-rate senior secured callable bonds until May 14, 2015 in exchange for a higher coupon and a restructuring fee.

The margin over Libor would increase to 1,250 bps for the quarter ending May 14, 1,350 bps for the quarter ending Aug. 14, 1,450 bps for the quarter ending Nov. 14, 2014, 1,550 bps for the quarter ending Feb. 14, 2015 and 1,650 bps through maturity.

The amendment would add the ability to pay interest in kind if the company determines it does not have enough cash to pay all or part of the accrued interest. If interest is paid in kind, the margin over Libor would be 2,000 bps for the quarter ending May 14, 2,200 bps for the quarter ending Aug. 14, 2,400 bps for the quarter ending Nov. 14, 2014, 2,600 bps for the quarter ending Feb. 14, 2015 and 2,800 bps through maturity.

The amendment would increase the redemption price of the notes to 102% of par from 101% of par for the three-month period beginning six months after the effective date and to 103% of par from 101% of par beginning nine months after the effective date through maturity.

The restructuring fee would be 1.5% paid to holders within five days of the effective date plus 2% on each of Nov. 14, 2014, Feb. 14, 2015 and maturity. It would be payable in cash or in kind at the company's option.

The company has experienced operating challenges that have materially affected its profits and cash flow and has been in discussions with an ad-hoc committee of bondholders representing more than 66 2/3% of the bonds, according to a notice from bond trustee Norsk Tillitsmann ASA.

A meeting will be held on March 17 in Oslo.

At least half the bonds must be represented at the meeting in order to form a quorum, and the holders of at least two-thirds of the bonds represented at the meeting must vote in favor of the measure in order for it to pass.

As reported on Feb. 26, the company received bondholder approval to extend the maturity of the bonds to March 14, 2014 from Feb. 14, 2014.

The trustee said on Feb. 14 that Sea Production lacked the funds to repay the bonds in full on the original maturity date.

The extension was to allow restructuring talks with an informal bondholder committee to continue.

Sea Production makes floating production storage and offloading units and floating storage and offloading units. The company is based in Oslo.

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