Point Resources calls $300 million 8˝% bonds at 115.044 for merger

By Susanna Moon

Chicago, Dec. 3 – Point Resources AS exercised the call option under its $300 million of 8˝% callable senior bonds due 2024.

The notes will be redeemed at a price of 115.044% of par plus accrued interest and 1.5% amendment fee, according to a notice by Nordic Trustee AS.

Settlement will occur on Dec. 10. The record date is Dec. 6.

As announced Oct. 23, the issuer was asking for holder approval to call the bonds in connection with a planned merger with Eni Norge AS, which will result in a change of ownership under the note terms and constitutes a technical breach.

Meanwhile, bondholders representing 50% of the bonds had told the trustee that they were opposed to the written resolution and, in the alternative, do not plan to tender their notes in any offer, according to a previous notice by Nordic Trustee.

Instead, the holders of at least one-tenth of the bonds are looking to hire a law firm to advise the trustee with the third option proposed, which is setting up a defeasance amount under the bonds.

The deal is set to close between Dec. 10 and Dec. 21, and the sum of all principal and future interest on the bonds will be about 150% of par, the trustee said on Friday.

Any defeasance amount that is less than 150% of par would be inadequate “to relieve the issuer of its obligations” and the closing of the merger would constitute a default under the note terms, the release said.

Issuer resolution

Specifically, the issuer was looking to call the bonds to avoid being in technical default under the note terms, which require Point Resources Holding AS to maintain 100% direct control and ownership of the company, according to a previous notice.

The price for redeeming the bonds under the merger call option is 115.044% of par plus accrued interest. The call price is based on the U.S. Treasury plus a make-whole premium of 50 basis points.

If the call was not approved by the required majority, the company will hold a conditional tender offer for the bonds at a price of 114.69%, which is based on the U.S. Treasury plus a make-whole premium of 65 bps.

The call price and tender price assume a settlement date of Dec. 10 and use Treasury rates as of the close of business on Oct. 19.

Finally, if the company is unable to repurchase the bonds by either the call or tender offer, the company will transfer a “sufficient” amount to a defeasance account.

Under the terms of the merger, the surviving company would be renamed Var Energi AS and be jointly owned by Eni with a 69.6% stake and HitecVision with a 30.4% stake.

The bonds were issued March 19, 2018.

Pareto Securities AS is the financial adviser.

Point is an oil and gas exploration and production company based in Sandnes, Norway.

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