Noreco proposes amending convertible bonds to preserve equity value

Chicago, Nov. 8 – Norwegian Energy Co. ASA is proposing amendments to its $165,229,319 convertible bond loan due 2027 (ISIN: NO0010851520), according to a press release.

The company has already engaged with its largest bondholders.

Following discussions, the issuer is proposing some amendments.

Amendments

Based on the original terms, the bonds would be mandatorily convertible into shares on Nov. 8, 2023 based on the 20-day volume weighted share price before that date.

The company seeks to extend the mandatory conversion date by two years (following the expected Tyra first gas date next winter). The new mandatory conversion date would be Dec. 31, 2025.

Noreco also wants to introduce a call option to allow the company to redeem the bonds with cash at the higher of par value and parity value in December 2025.

The principal amount would change to $227 million from approximately $165 million through the issuance of compensation bonds that will reflect the premium of the current share price relative to the existing conversion price.

The proposed amendment would also reset the conversion price to $51.4307 per share with a fixed exchange rate of 10.44 (dollar to krone) corresponding to NOK 537 per share, or a 30% premium to the volume weighted average share price for the previous three trading days.

Interest would still be at 6% cash and 8% pay-in-kind.

The notes would have a soft call triggered by a 130% hurdle.

Details

The company wants to use the process to simplify and enhance its capital structure, and reduce dilution of existing and future shareholders.

The company has asked Nordic Trustee AS to dispatch a summons for a written resolution for the amendments.

The voting period will expire on Nov. 22. Bondholders would be able to convert under existing terms until the effective date, expected to be Nov. 30.

The company has already received support from holders of more than two-thirds of the bonds.

The amendments will be approved at an extraordinary general meeting that will be held on Nov. 30.

The company has also already garnered support from more than half of its shareholders.

The compensation bonds, mentioned above, will be listed on Oslo Bors. They will be on a separate ISIN until the prospectus has been issued and published.

Arctic Securities AS and Pareto Securities AS have been engaged as financial advisers.

Advokatfirmaet BAHR AS is working as a legal adviser for the company. Advokatfirmaet Thommessen AS advised the financial advisers.

Norwegian Energy, also known as Noreco, is a Stavanger, Norway-based oil and gas company.

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