Fram holders vote to extend maturity of 13% convertible bonds

By Jennifer Chiou and Caroline Salls

New York, Jan. 12 – Fram Exploration ASA’s 13% senior secured convertible bondholders met and approved a 15-month extension of the bond issue, according to a notice from bond trustee Nordic Trustee ASA.

The proposed resolution received 91.88% of votes at the Monday meeting.

As previously reported, Fram said it would likely not be able to make its first-quarter interest payment on the bond. Under the proposal to the bondholders, interest will be paid on the new maturity date.

The company already noted that its board has received an offer from Rex International Holding Ltd. to underwrite $6 million of an up to $10 million share issue with preferential subscriptions for existing shareholders.

Fram said its share capital will be increased by a minimum of NOK 28 million and a maximum of NOK 74 million by the issuance of a minimum of 14 million and maximum of 37 million of new shares with a par value of NOK 2. The subscription price per share is NOK 2.

The company will also issue a minimum of 14 million and maximum of 37 million warrants, entitling the holder to subscribe for three shares per warrant at a price of NOK 2.

As stated, a condition to Rex’s offer is that that the capital raised be used to increase the value of Fram’s assets. As a result, the bondholders are being asked to approve changes to the bond terms, including the maturity extension to Dec. 30, 2016.

Bondholders were also asked to accept that the company’s issuance of shares and warrants does not trigger an adjustment to the bond conversion price.

In return, the shareholders will finance further development and validation of the assets in which the bondholders have security.

Fram’s board told shareholders that it will be obligated to file for bankruptcy if there is no solution by early January, according to a Dec. 19 release.

The company said it previously entered into a share subscription agreement on March 4, 2014 with Loyz Oil Pty. Ltd., securing $41.1 million of equity funding in the form of cash and in-kind contributions to secure financing for Fram’s seismic and drilling programs in Colorado and North Dakota.

Although Loyz shareholder Jitsun Ltd. issued a put option to Fram under which some assets used as a contribution in kind could be turned into cash, Fram said Jitsun failed to honor this obligation when the put option was exercised in September.

Fram Exploration is an oil and gas company based in Trondheim, Norway.

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