Gulf Keystone seeks votes to amend 13% notes due 2017; meeting set

By Susanna Moon

Chicago, April 28 – Gulf Keystone Petroleum Ltd. said it set a meeting for holders of its $250 million of 13% guaranteed notes due 2017.

Gulf Keystone is proposing to add a noteholder engagement covenant, according to a company notice.

The meeting will be held in London at 9 a.m. ET on May 21.

In order to form a quorum, there must be holders representing “a clear majority” of the outstanding notes. To pass, the measure needs votes for at least 75% of the votes cast.

Holders must send electronic voting instructions by 9 a.m. ET on May 19.

Recent amendments

Gulf Keystone said on April 8 that noteholders voted to amend the 13% at a meeting held in London at 9 a.m. ET on April 7.

As a result, the company obtained the needed consents to remove the book equity ratio covenant from the trust deed constituting the notes, according to a previous press release.

Holders representing more than 89% of the outstanding notes took part in the consent solicitation, with more than 99% of votes cast for the proposed amendments.

In order to form a quorum at the meeting, there needed to be holders representing at least 75% of the outstanding notes.

To pass, the measure required a majority of at least 75% of the votes cast.

The consent fee was $5.00 for each $1,000 principal amount.

The company said on April 2 that noteholders delivered consents to amend the notes, following extension of the early consent deadline by one day and an extension to the expiration date.

As previously announced, the early consent date was pushed back to 10 a.m. ET on April 2 from 12 p.m. ET on April 1 and the expiration to 10 a.m. ET on April 2 from 12 p.m. ET on April 1.

The company previously extended the early consent date from 12 p.m. ET on March 23 in an announcement on March 24, making it the same as the consent expiration.

Gulf Keystone announced the solicitation on March 12. The company sought consents to amend the notes in order to avoid triggering a put option.

Originally, the early consent fee was set at $5.00 for each $1,000 principal amount, with the late consent fee at $1.50 for each $1,000 principal amount.

Offer background

Gulf Keystone previously said it sought to remove the book equity ratio put option in order to strengthen its ability to negotiate under some planned corporate actions.

The changes also grant a security interest in favor of the holders of the 13% notes and the company’s 6¼% convertible bonds due 2017 over the shares of Gulf Keystone Petroleum International Ltd., subject to negotiation of the terms of the security and intercreditor documentation, reducing some of the grace periods for certain events of default and including additional notifications to the trustee, and beginning a dialogue with a committee of holders of the notes if and when the company’s cash balance, including the debt service reserve account, drops below $50 million for five consecutive business days.

Some of the measures will need to be formally approved at an additional meeting of holders of the notes and the convertible bonds, to be called by the company within 15 business days of the noteholder meeting on April 7.

However the removal of the book equity ratio covenant is not subject to the additional meetings.

The company said it has recently begun talks about possible asset transactions or a sale of the company and, at the same time, is exploring a number of funding alternatives, including an equity offering.

The company said it expects the BER to be below 0.4 for fiscal 2014, due to an expected impairment of its Akri-Bijeel asset, which it views as a non-core asset that has been held for sale. The expected impairment is the result of a technical accounting requirement under IFRS and is not as a result of the company’s liquidity position, the release said.

If the BER is below 0.4 for 60 days after the company releases its 2014 annual report and accounts, the company said it will be required to make an offer to purchase the notes.

More details

The solicitation agents are Deutsche Bank AG, London Branch (Reid Payne, +44 20 7547 6153 or e-mail: reid.payne@db.com, Gayatri Narayan, +44 20 7547 3693, e-mail: gayatri.narayan@db.com), Perella Weinberg Partners UK LLP (Tanguy Riviere, +44 20 7268 2874 or e-mail: triviere@pwpartners.com, Yue Zhou, +44 20 7268 2844 or e-mail: yzhou@pwpartners.com).

The information and tabulation agent is D.F. King Ltd. (+44 20 7920 9700 or e-mail: gkp@dfkingltd.com).

Gulf Keystone said when it launched the solicitation that its liquidity was recently enhanced by the $26 million prepayment for future Shaikan crude oil export sales announced on Feb. 25, with the company’s cash balance at $90.4 million.

Gulf Keystone said it is preparing to resume production from the Shaikan field, which was suspended in mid-February, and crude oil export deliveries by truck to the Turkish coast.

The company said it continues to work with the Kurdistan government to set up a regular payment cycle for past and future crude oil export sales and payment of arrears and to finalize an early pipeline access solution for the Shaikan crude.

The company said it intends to meet its debt payment obligations.

London-based Gulf Keystone is an independent oil and gas exploration, development and production company focused on exploration in the Kurdistan Region of Iraq.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.