Iona Energy gets bondholder approval to reallocate $24 million cash

By Marisa Wong

Morgantown, W.Va., Oct. 13 – Iona Energy Inc. received the needed consents to some proposed amendments from holders of its 9½% senior secured callable bonds due 2018.

There were sufficient bondholders present at the meeting held on Tuesday, and the proposed amendments obtained 99.95% of the votes, according to a notice from bond trustee Nordic Trustee ASA.

On Oct. 5, the issuer asked bondholders to approve amendments to the terms of its restructuring.

The company wanted to defer the $24 million restricted cash repayment that would have been paid to bondholders on the restructuring date and instead use the cash itself to provide additional financial headroom, according to a prior press release.

In order to amend the terms, the company needed approval by a two-thirds majority of bondholders.

The company said before that it received “strong” support for the amendments from the ad-hoc committee of bondholders.

The company previously said, “Macro economic factors and certain items specific to the company have impacted Iona’s view of future potential liquidity requirements” including oil price swings, currency exchange volatility and “a provision for later Huntington capex and consequent re-phasing of revenue arising from that Huntington capex.”

Background

As previously reported, bondholders approved an extension in the long stop date for completion of its restructuring to Nov. 30 from Sept. 30 at a meeting held Sept. 30.

The approval required a two-thirds majority.

As announced on Sept. 23, the restructuring was approved by the bondholders of Iona Energy Co. (UK) plc at a meeting held Aug. 6, but the company said it has since realized that it needs more time to finalize some of the documentation.

“The restructuring and all its constituent transactions or arrangements are in agreed form but remain subject to negotiation and execution of final documentation,” the company noted at the time.

As disclosed on Aug. 6, Iona said it received bondholder approval to refinance its 9½% bonds due 2018.

The proposed measure obtained 97.61% of the votes cast.

The key terms of the proposal included the following:

• The sale of a 25% working interest in the Orlando asset in consideration for payment of the company’s share of the development costs for the Orlando oil field up to $25.5 million, plus additional cash payments to the issuer after first oil at the Orlando asset;

• The provision of deferred payments or loans of an estimated $33 million, repayable in installments within nine months following first oil;

• A cash repayment to bondholders of $24 million on the outstanding bond debt on the restructuring implementation date;

• A reduction of the outstanding debt under the bond to $120 million with effect from the restructuring implementation date, and the swap of the outstanding bond debt exceeding $120 million in exchange for Iona common shares representing 87% of the issued and outstanding common shares as of the restructuring implementation date; and

• The ability for the issuer to use $31 million of the restructured funds currently held in the escrow account to achieve first oil at the Orlando asset.

Iona issued $275 million of the senior secured bonds on Sept. 27, 2013 through its U.K. subsidiary, Iona Energy Co. (UK) plc.

Iona is a Calgary, Alta., oil and gas company with assets in the United Kingdom’s North Sea.

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