Russia’s Alliance Oil: Noteholders must keep $100,000 of 9 7/8% notes in consent solicitation

By Toni Weeks

San Luis Obispo, Calif., Feb. 23 – Russia’s Alliance Oil Co. Ltd. announced a new condition for its consent solicitation for its $350 million of 9 7/8% guaranteed notes due 2015. The company is soliciting consents to approve an extraordinary resolution.

Alliance Oil says it will now accept from a noteholder notes tendered to the extent that such tender acceptance ratio application will not result in a noteholder holding less than $100,000 of notes. The company said that this limitation will allow noteholders a better opportunity to participate in the offer.

According to a Feb. 13 news release, the company is offering a tender consideration of $1,000 per $1,000 principal amount. It said it would pay an early consent fee of $15 per $1,000 of notes to those who deliver consents by the early consent deadline, 5 p.m. ET on Feb. 17. Those who deliver consents after that date but prior to the final deadline will receive a $5 late consent fee.

Alliance Oil will accept up to 20% of the notes validly tendered at or before the early deadline and up to 5% of the notes validly tendered after the early deadline but before the expiration, in either case rounded down to the nearest $1,000 and subject to the minimum acceptance amount of $100,000.

The final consent deadline and expiration date will be midnight ET on March 13. Settlement is expected to occur on March 18.

Holders may participate in the consent solicitation without tendering their notes.

Prior solicitation

On Feb.13, the company, after discussions with its noteholders, terminated its original consent solicitation and announced the new cash offer.

The prior solicitation launched on Feb. 6 and had been set to close at midnight ET on Feb. 27.

A meeting, which had been set for March 2 in London, was adjourned without a date set for a future meeting, but the company did announce a March 17 meeting to take place in London.

According to a prior company press release, Alliance Oil began discussions with lenders to extend the maturity of short-term loans and expected to receive their consents in the near term.

As of Jan. 30, the consolidated cash position of the issuer and its consolidated subsidiaries was about $228 million, with about $172 million attributable to the issuer. Out of this amount, about $65 million was locked at the joint ventures level with the group’s participation, the press release noted.

“Negative macroeconomic environment and budgeted capital expenditures for 2015 significantly limit such joint ventures’ ability to pay out dividends to their shareholders, and passing the locked cash to the shareholders requires a certain corporate restructuring and increase in equity capital of such joint ventures,” the prior press release said.

The rest of about $107 million will be used to cover working capital and other operating needs of the issuer, to cover expenses for the consent solicitation and to make the payment of coupon on the notes on March 11 as scheduled, the prior release notes.

The total amount of the group’s outstanding debt as of Jan. 1 is about $2,226,000,000, of which more than 60% is denominated in dollars. In 2015 about $595 million of the group’s debt is due for repayment, including $350 million under the 9 7/8% notes.

Loans maturing in 2015 were drawn last year for the development of the resource base and for finalization of the Khabarovsk Refinery modernization, as well as for construction on a connecting pipeline from the Khabarovsk Refinery to ESPO.

The average split between the foreign currency and ruble portion in the group’s revenue is about 37% and 63%, respectively. Final maturity of the largest portion of the group’s remaining debt falls between 2018 and 2024.

VTB Capital plc (44 20 3334 8029 or vtb.dcm@vtbcapital.com) is the dealer manager and solicitation agent, and Lucid Issuer Services Ltd. (44 207 704 0880 or allianceoil@lucid-is.com) is the tender, tabulation and information agent.

Alliance Oil is a Moscow-based independent oil and gas company with vertically integrated operations in Russia and Kazakhstan.

© 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.