PetroProd seeks 10.85% bondholder consent to put off required equity offering

By Angela McDaniels

Tacoma, Wash., Dec. 11 - PetroProd Ltd. will ask holders of its 10.85% secured callable bonds due 2013 to approve the postponement of a required equity offering at a bondholders meeting on Dec. 19.

Under the terms of the bonds, PetroProd must place at least $45 million of proceeds from an offering of new equity in an escrow account and apply at least $35 million toward its CJ70 project under construction.

The company wants to extend the deadline for this requirement to Feb. 28 from Dec. 31.

PetroProd said it is asking for the extension due to challenging conditions in the equity markets and because its major shareholder, Petrojack ASA, is unable to participate in any equity offering right now due to limited free cash holdings.

The company has obtained a postponement of the $57.5 million payment due on the CJ70 project on Oct. 31 until the end of June and is renegotiating payment terms.

If bondholders approve the extension, the company will agree to pledge additional security for the bonds, give a monthly update on the work in progress and commission a due diligence and give bondholders access to the results.

PetroProd is an Oslo-based oil company focusing on small- and medium-sized oil fields.

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