Kazakhstan’s Nostrum tweaks early tender count for Zhaikmunai notes

By Susanna Moon

Chicago, July 18 – Nostrum Oil & Gas LP’s subsidiary, Nostrum Oil & Gas Finance BV, has received total tenders for $605,028,000 of notes issued by Zhaikmunai LLP as of 5 p.m. ET on July 13, the early tender date.

As announced June 29, the company is tendering for a capped amount of Zhaikmunai LLP’s 7 1/8% senior notes due Nov. 13, 2019 and its outstanding 6 3/8% senior notes due Feb. 14, 2019.

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.

Investors have tendered $390,634,000 of the 7 1/8% notes and $214,394,000 of the 6 3/8% notes, according to a company notice on Tuesday. The initial announcement was for $374,834,000 of the 7 1/8% notes and $209,969,000 of the 6 3/8% notes as of the early deadline.

In addition, holders had given consents only for another $117,214,000 of the 7 1/8% notes and $133,931,000 of the 6 3/8% notes.

As a result, Nostrum has secured the needed majority of each note series to pass the proposed amendment and waiver.

The tender offers will continue until 11:59 p.m. ET on July 27.

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

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

If the offers are oversubscribed, the company will prioritize the purchase of a majority of each of the note series on the basis that the required consents are obtained for both series and once priority is achieved, to prioritize the purchase of the 7 1/8% notes over the 6 3/8% notes, the release noted on Friday.

The total purchase price for each $1,000 principal amount will be as follows:

• $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.

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

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

On July 10, 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.

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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