Heritage Oil 8% bondholder committee formed to discuss solicitation

By Jennifer Chiou

New York, Dec. 16 - Weil, Gotshal & Manges LLP, a law firm, said it represents an ad hoc committee of holders of Heritage Oil Corp.'s $165 million of 8% convertible bonds due 2012, and it is inviting other holders to join, according to a news release.

The company began a consent solicitation on Dec. 9.

Bondholders are being asked to remove the restriction that prevents parent company Heritage Oil plc from making or declaring a dividend or making any other distributions to its shareholders that totals, on a consolidated basis, more than 30% of its earnings for the preceding financial year.

Heritage Oil plc has agreed to sell some interests in Uganda to Eni SpA and is considering returning some of the proceeds to shareholders through a special dividend of 75p to 100p per share. The transaction is not expected to be completed until the first quarter of 2010, so without the change the company would be restricted from making a dividend until after the annual audited consolidated accounts for the financial year ending Dec. 31, 2010 have been published.

The company is offering a consent fee of $2,000 for each $100,000 principal amount of convertibles.

The company is also asking bondholders to waive any adjustment to the conversion price that could otherwise arise in connection with the declaration of any dividend on or before June 30, 2010.

In consideration for the waiver, bondholders will receive any dividend that is declared at the rate they would be entitled to receive had they converted their bonds into ordinary shares.

Bondholders will vote on the proposals at a meeting on the Channel Island of Jersey on Dec. 31. Holders who wish to vote by proxy have until 5 a.m. ET on Dec. 29 to deliver their voting instructions.

Holders of at least 75% of the principal amount of bonds must be present or represented at the meeting in order to reach a quorum, and the proposals must be approved by at least 75% of the votes cast at the meeting in order to pass.

If the proposals are not approved, the company plans to change its accounting reference date to extend the financial year into 2010 so that the transaction can be recognized in the current financial period, allowing a distribution to be made to shareholders in 2010.

The agent for the consent solicitation is the Bank of New York Mellon (+44 0 207 964 4958, attn: Andrew Rogers).

Holders who wish to join the committee may contact Weil, Gotshal & Manges at LO.Heritage.Oil@weil.com or +44 207 903 1359.

Heritage Oil plc is an independent upstream oil and gas exploration and production company based in Jersey, Channel Islands.

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