Abraxas starts consent solicitation for 11½% notes

New York, June 3 - Abraxas Corp. said it has begun a consent solicitation for its $128 million principal amount of 11½% secured notes due 2007.

The San Antonio oil and gas exploration and production company is seeking consent to modify the covenants limiting it to $10 million a year in capital expenditures.

Under the proposed amendment, capital expenditures will be limited so that the ratio of the company's consolidated EBITDA to the sum of consolidated cash interest expense plus capital expenditures minus net proceeds from qualifying equity security or subordinated debt offerings must not be less than 1.0-to-1.0 for any fiscal year beginning with the fiscal year ending Dec. 31, 2004.

For holders who consent, Abraxas will pay $10.00 per $1,000 principal amount.

Abraxas needs consents from holders of a majority of the notes.

If the consents received exceed the majority requirement then the consent payment will be paid on a pro rata basis.

The solicitation expires at 5 p.m. ET on June 14.

Guggenheim Capital Markets LLC is solicitation agent (212 381-7500). Global Bondholder Services Corp. is tabulation agent and information agent (212 430-3774).

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