Milagro Oil & Gas terminates exchange offer for 10½% second-lien notes

By Angela McDaniels

Tacoma, Wash., Oct. 31 - Milagro Oil & Gas Inc. terminated the private exchange offer and consent solicitation for its $250 million 10½% senior secured second-lien notes due 2016, according to an 8-K filing with the Securities and Exchange Commission.

The offer began May 17 and was scheduled to end at 5 p.m. ET on Oct. 31 after being extended from Aug. 30 and, before that, June 14. The withdrawal deadline was May 31.

Milagro planned to transfer substantially all of its assets to Vanquish Energy, LLC, a newly formed Delaware limited liability company, in connection with the completion of the exchange offer.

The company offered class A units of Vanquish Energy and new 10½% senior secured second-lien notes due 2017 issued by Vanquish Energy and Vanquish Finance, Inc. or cash for up to a maximum of $65 million principal amount of the old notes.

For each $1,000 principal amount of notes tendered by the consent deadline, 5 p.m. ET on May 31, holders would have received (i) $500 principal amount of new notes and 500 class A units or (ii) $750 cash.

For each $1,000 principal amount of notes tendered after the consent deadline, holders would have received (i) $475 principal amount of new notes and 475 class A units or (ii) $700 cash.

The amount of notes exchanged for cash was subject to a cap equal to the greater of (i) $40 million and (ii) the lesser of $65 million and $40 million plus the amount by which the aggregate new capital investment exceeds $130 million multiplied by 1.33.

The new notes would have had substantially the same terms as the old notes. The coupon would have been payable 50% in cash and 50% in kind.

Milagro also solicited consents to amend the notes to eliminate or waive substantially all of the restrictive covenants, release the collateral and guarantees securing the old notes, eliminate some events of default and modify covenants regarding mergers and consolidations.

Holders had to deliver consents in order to tender their notes and vice versa.

The exchange offer was conditioned on the receipt of tenders for at least $237.5 million principal amount of the notes and the needed consents to amend the notes.

When the offer began, holders of about 66.5% of the notes had agreed to tender their notes.

D.F. King & Co., Inc. (800 290-6427, 212 269-5550 or milagro@dfking.com) was the information agent.

Milagro is a Houston-based oil and gas company.

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