Echo Energy adjourns 8% secured noteholder meeting to Oct. 13

By Marisa Wong

Los Angeles, Sept. 28 – Echo Energy plc announced the results of the meeting of holders of its €20 million 8% secured notes to consider proposals for the restructuring of the notes. The meeting was held at 5 a.m. ET on Sept. 28.

Voting instructions representing €6.2 million of the notes were lodged by holders, with 76% of votes cast in favor of the proposals, according to a company announcement on Wednesday.

With votes representing only 31% of the aggregate principal amount of the outstanding notes cast, the meeting was adjourned for lack of quorum.

An adjourned meeting for holders to consider the same proposals will now be held on Oct. 13.

The adjourned meeting will require a reduced quorum of 25% of the aggregate principal amount of the outstanding notes and not less than two thirds of votes cast in favor for the proposals to be passed.

Voting instructions already lodged by noteholders remain valid for the adjourned meeting, and the relevant holders do not need to take any further action to be represented at the adjourned meeting.

Proposals

Under the proposals, the company is seeking noteholder consent to do the following:

• Convert 50% of the outstanding principal amount of the notes, together with accrued interest, into new ordinary shares in the company at a price of 0.45p per share;

• Reduce the notes’ interest rate to 2% per annum on any interest accruing from Sept. 30;

• Extend the maturity date to May 15, 2032; and

• Change the minimum denomination of the notes to €50,000.

If approved by the required majority of noteholders, any and all interest on the notes accruing from Sept. 30, 2022 to Sept. 30, 2024 will be paid in cash on the maturity date. However, noteholders will still be able, from Sept. 30, 2022, to elect to receive note interest payments for the immediately preceding quarter in new ordinary shares, subject to the company having the required share issuance authorizations in place from time to time to satisfy any such elections and to noteholders holding at least 50% of the notes having made elections for the relevant quarter. Any such ordinary shares will be issued at an effective issue price equal to the volume weighted average price of an Echo ordinary share for the 10 business days before the relevant interest conversion date. Any and all interest on the notes accruing from Sept. 30, 2024 will be paid in cash at the reduced interest rate of 2% per annum on the last business day of the interest period until the maturity date.

The company is also seeking, subject to noteholder approval at the meeting, to amend an existing note covenant that the company will not, without the prior consent of noteholders by way of a simple majority of those voting, drill an exploration well with a budgeted cost to the company of in excess of €5 million for so long as the notes are outstanding. The company is proposing that the covenant be amended so that the covenant will only be in force in the last 18 months prior to the maturity date.

Subject to the passing of the proposals at the noteholder meeting, the company will make a payment to noteholders of an aggregate cash amount equal to 6% of the total outstanding principal amount plus interest accrued from Dec. 31, 2019 to but excluding the conversion date, payable to holders voting in favor of the proposals at the meeting pro rata to votes cast, to be satisfied by the issue of new ordinary shares at an issue price of price of 0.45p per share.

If approved, the proposals will remain conditioned on approval by the company’s shareholders at a general meeting for the authorities to issue the new ordinary shares in connection with the implementation of the proposals and the proposed conversion of company’s existing €5 million 8% secured convertible debt facility.

A copy of the circular sent to noteholders will be available on the company’s website at www.echoenergyplc.com/.

The notes are listed on the Luxembourg exchange.

Echo Energy is a London-based oil and natural gas holding company focused on South and Central America.

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