Baytex starts exchange for 10½% notes due 2011

New York, June 3 - Baytex Energy Ltd. announced late Tuesday an exchange offer for its $150 million 10½% senior subordinated notes due 2011.

For each $1,000 principal amount of the old notes, the Calgary, Alta. company is offering $1,200 of new 9 5/8% senior subordinated notes due 2010.

Of the proposed amount of new notes, $20 principal amount is a consent payment that will only be paid to holders who tender by June 17.

The exchange is subject to various conditions including that at least 75% of the outstanding principal amount of the old notes are tendered.

The exchange ends at 5.00 p.m. ET on July 2.

Concurrently with the exchange, the company will reorganize through a plan of arrangement, resulting in the formation of a new oil and gas trust and a new publicly traded exploration-focused company.

On completion of the arrangement, shareholders of Baytex will receive one unit of the trust and one-third of a common share of the new publicly traded exploration-focused company.

The new notes will contain covenants to facilitate the trust's proposed future distribution practices and the old notes will be amended as part of the exchange to permit the proposed reorganization.

The offering of the new notes in the exchange is being made only to qualified institutional buyers and non-U.S. persons located outside the U.S. as defined by Rule 144A and Regulation S of the Securities Act of 1933, as amended.

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