Kazakhstan’s Nostrum lifts tender price for Zhaikmunai’s 7 1/8% notes

By Susanna Moon

Chicago, July 10 – Nostrum Oil & Gas LP’s subsidiary Nostrum Oil & Gas Finance BV increased the tender payment for Zhaikmunai LLP’s outstanding 7 1/8% senior notes due Nov. 13, 2019.

As announced June 29, the company is tendering for a capped amount of Zhaikmunai LLP’s 7 1/8% notes and its outstanding 6 3/8% senior notes due Feb. 14, 2019.

The tender offer price for the 7 1/8% notes is now $986 per $1,000 of notes, raised from $976 per $1,000 of notes, for a total payment including early premium of $1,026 per $1,000 of notes, plus a consent payment of $4 per $1,000 principal amount.

If the needed consents are not obtained for the 7 1/8% notes, then the tender price will be further increased by $4 per $1,000, to a base price $990 per $1,000 principal amount, or for a total purchase price of $1,030 per $1,000, but with no further consent payment, according to a company notice.

The company added that if it fails to secure consents for the 6 3/8% notes, then the tender offer price will further increase by $4 per $1,000 of notes, so that the tender offer price will rise to $980 per $1,000 of notes. The total purchase price would go up to $1,010 per $1,000, but with no more consent payment.

Nostrum is also soliciting consents to amend the notes to align the covenants with those to be contained in the company’s planned new notes.

On Monday, the company added the following amendments to those being sought as part of the offers:

• The consolidated coverage ratio will be amended to 2.75 times from 2.5 times;

• The ability to incur vendor financing for assets or services in the oil and gas business that would not count toward the consolidated coverage ratio will be capped at $350 million, rather than unlimited;

• Debt will be permitted under a general basket of no more than the greater of $50 million and 5% of total assets rather than the greater of $125 million and 5% of total assets; and

• Permitted liens will be permitted under a general basket of no more than the greater of $50 million and 5% of total assets rather than the greater of $125 million and 5% of total assets.

Similar amendments will be made to the covenants in the offering of new notes, which was also announced on June 29, the release noted.

The purchase amount in the tenders will depend on the amount of the new issue, the company previously said.

To summarize, the total purchase price for each $1,000 principal amount will be as follows, with the notes listed in order of priority acceptance levels:

• $560 million of 7 1/8% senior notes due 2019 with a total purchase price of $1,026, up from $1,016, which includes an early tender premium of $40 and a consent payment of $4; and

• $400 million of 6 3/8% senior notes due 2019 with a total purchase price of $1,006, which includes an early tender premium of $30 and a consent payment of $4.

The company also will pay accrued interest up to but excluding the settlement date.

The offers will continue until 11:59 p.m. ET on July 27, and the early tender deadline is 5 p.m. ET on July 13.

Holders who tender their notes before the early deadline will receive the total purchase price, which includes an early tender premium.

Nostrum plans to price an issue of new bonds guaranteed on a senior basis by Nostrum Oil & Gas plc and Zhaikmunai LLP.

The company said it is making the offers to extend the group’s debt maturity profile.

If the amendments and waiver are passed for a note series, holders who send tender instructions or consent-only instructions before the early deadline will receive a consent payment of $4 per $1,000 principal amount.

Citibank NA, London Branch (+44 20 7508 3867) is the tender agent. Citigroup Global Markets Ltd. (+44 20 7986 8969, 800 558-3745 or 212 723-6106) and VTB Capital plc (+44 20 3334 8029) are the dealer managers.

Uralsk, Kazakhstan-based Nostrum is an oil and gas exploration and production company that has interests in northwestern Kazakhstan.

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