Fram Exploration to defer meeting to amend 13% convertibles due 2015

By Susanna Moon

Chicago, Sept. 20 – Fram Exploration ASA has postponed the meeting for holders of its 13% senior secured convertible bonds, which had been set to mature in 2015.

The issuer will reschedule the meeting; in the meantime, the meeting set for Sept. 22 has been canceled, according to a notice by trustee Norsk Tillitsmann.

As announced Sept. 8 the issuer is asking to amend its 13% convertibles, specifically to push out the maturity until Dec. 31, 2018 and to reduce the coupon to 10% beginning Jan. 1.

Bondholders also would be waiving accrued interest until Jan. 1.

“The issuer’s financial position continues to be very strained,” according to a previous trustee notice.

The company is soliciting holders to approve bond amendments needed to carry out its plans for redeeming the bonds.

As part of the proposal, Loyz Energy Ltd. acquired NOK 32,601,218, or about 70%, of the par amount bonds with two major bondholders in May. Incidentally, Loyz holds 13.75% of the common shares of the issuer, and the issuer holds 14.1% of the shares of Loyz.

Loyz is offering to buy out the remaining bonds at 45% of par until Sept. 25, before a partial redemption of the bonds.

Holders may take up the offer by writing to henrik.danielsen@sb1markets.no.

The average Loyz share price on the SGZ-ST was S$0.013 for the five-day period prior to the summons, which implies that the Loyz shares would be priced at S$0.03, according to the notice. That valuation price would imply a price offer of about 19.5% for current market values, the trustee said.

Under the terms, the issuer also has proposed changing its corporate structure to an AS company from an ASA company.

In return for the approval, the issuer is offering bondholders with a pro rata partial redemption offer to receive a total of 61 million shares of Loyz valued at S$0.04, the trustee noted.

In order for the measures to pass, the holders of at least half of the voting bonds must be represented at the meeting, and the holders of at least two-thirds of the bonds represented at the meeting must vote in favor of them.

“The issuer is currently in a difficult cash flow situation, as all available resources are being allocated to maintaining the leaseholds serving as security for the bond, meeting regulatory requirements and performing mandatory work on the leases,” the notice said.

“The market for assets like those held by the issuer is soft at the moment, and any realization now is likely to be futile,” the notice continued.

As a result, the offer gives an opportunity for bondholders currently looking for liquidity.

The convertibles were issued in 2012.

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

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