United Energy, Transmeridian cancel investment agreement, offers for convertible preferreds, 12% notes

By Susanna Moon

Chicago, Nov. 17 - United Energy Group Ltd. said it terminated its cash tender offer for Transmeridian Exploration Inc.'s 15% senior redeemable convertible preferred stock and 20% junior redeemable convertible preferreds as of 5 p.m. ET on Nov. 14.

Certain conditions to the offer were not satisfied before its expiration, according to a company press release. No preferred was purchased in the offer.

The exchange offer and related consent solicitation of Transmeridian for $290 million principal amount of 12% senior secured notes due 2010 also was terminated because certain conditions were not satisfied.

The two companies mutually agreed to terminate their investment agreement, and they are exploring alternative transactions on a non-exclusive basis. Transmeridian also plans to solicit proposals from third parties for the sale, recapitalization or refinancing of the company.

Holders were offered $76 per preferred and $101 in cash plus $900 of new 12% senior secured notes due 2010 for each $1,000 principal amount of existing 12% notes.

As of 5 p.m. ET on Oct. 28, 185,881 junior preferreds and 61,316 senior preferreds had been tendered. The company had received tenders and consents from holders of $30.15 million of the 12% notes as of Sept. 10.

United Energy began the offer for the preferreds on Aug. 4 as part of its investment agreement with Transmeridian announced on June 11. The exchange offer for the 12% notes began on July 23.

The tender offer for the preferreds was subject to conditions including acceptance by holders of at least 90% of each series of preferreds, government approvals, approval by the holders of Transmeridian's common stock and holders of United Energy's ordinary shares and the successful closing of the exchange offer and consent solicitation for the 12% notes.

The exchange offer for the 12% notes was subject to the receipt of tenders for at least 90% of the notes, excluding any held by United Energy, and successful completion of the tender offer for the preferreds.

Transmeridian announced on Oct. 8 that the minimum participation threshold had been met in the exchange offer for the 12% notes and that it received the needed consents.

Citigroup Global Markets Inc. (800 558-3745) was dealer manager for the tender offer for the preferreds.

Transmeridian is a Houston-based independent energy company.

United Energy is an investment holding company based in Hong Kong.

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