Rocksource does not get OK to amend terms of floaters due 2012

By Toni Weeks

San Diego, Oct. 12 - Bondholders of Rocksource ASA's NOK 182.5 million of outstanding floating-rate notes due May 4, 2012 turned down the company's proposed amendments to the notes' terms at an 8 a.m. ET meeting on Oct. 11 in Oslo, according to a bondholder notice from trustee Norsk Tillitsmann ASA.

Though enough bondholders were present at the meeting to form a quorum, the proposed resolution obtained only 60% of the votes, which was not sufficient for adoption of the amended terms. For the amendments to pass, at least half of the outstanding bonds needed to be represented in person or by proxy at the meeting, and the holders of at least two-thirds of the bonds represented at the meeting needed to vote in favor of the proposal.

As previously reported, Rocksource was seeking the following changes to the terms for the notes:

• The maturity date to be extended to May 4, 2013 but accelerated to Feb. 1, 2013 if the company had not raised at least NOK 50 million of new equity by this date;

• The interest rate to be increased to Nibor plus 700 basis points from Nibor plus 500 bps;

• The net proceeds of any asset sales to be split 65% to the bondholders and 35% to the company, with the portion allotted to the bondholders to be applied to the redemption of the bonds at 104% of par plus accrued interest;

• The bonds to be granted additional security;

• The company to refrain from investing in additional licenses outside the Norwegian Continental Shelf unless financed by additional equity or through asset sales;

• The denomination of the bonds to be changed to NOK 1 from NOK 500,000;

• All redemptions to be made on a pro rata basis; and

• A non-call provision to apply once the conditions precedent are met.

If the changes had been approved, the company planned to redeem NOK 60 million of the bonds at par plus accrued interest no later than five days after the conditions precedent are met and the remaining outstanding amount of the bonds as soon as possible.

The conditions precedent include the approval of the proposal by the bondholders, the execution of the amendments to the bond agreement and the trustee's satisfaction that a Norwegian Continental Shelf exploration credit facility agreement for 2012 is fully committed by a reputable bank.

Rocksource is an independent oil and gas company based in Bergen, Norway.

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