MXenergy increases payment in exchange offer for floating-rate notes

By Angela McDaniels

Tacoma, Wash., Aug. 17 - MXenergy Holdings Inc. increased the payment on offer in the private exchange offer and consent solicitation for its floating-rate senior notes due 2011, according to a company news release.

For each $1,000 principal amount of notes exchanged, holders will receive $426.96 principal amount of a new series of senior secured notes due 2014, 213.75 shares of the company's newly created class A common stock, $138.15 in cash and accrued interest up to but excluding the settlement date.

The company will also pay a premium of $30.00 for each $1,000 principal amount of the notes tendered by the early deadline.

MXenergy was previously offering $393.33 principal amount of new notes, 188.91 shares, $138.15 in cash and accrued interest, plus the early premium.

The company amended some of the terms of the new notes being offered. It increased the coupon to 13.25% from 13%, added subordination provisions and made changes to the ranking of the new notes as well as intercreditor and security provisions.

The number of shares being offered represents 62.5% of the company's common stock, increased from 55%.

The minimum tender condition has been increased to 95% of the notes from 90%.

The consent deadline was extended to 5 p.m. ET on Aug. 28 from Aug. 14, and the expiration date of the offer was extended to midnight ET on Aug. 29 from Aug. 15.

MXenergy also:

• Extended the deadline for closing the offer to Sept. 30;

• Updated the description of capital stock in the offering memorandum to include, among other things, class D common stock and special approval rights granted to the holders of the class A, class B and class C stock;

• Added the requirement that the company repay the existing credit facility with Denham Commodity Partners LP up to $12 million; and

• Added the requirement that all tendering noteholders execute and deliver the stockholders agreement, the notes registration rights agreement (as defined in the offering memorandum), the equity registration rights agreement and the class A voting agreement.

As of midnight ET on Aug. 15, holders had submitted tenders and consents for approximately $158.8 million principal amount of notes and consented to the proposed amendments.

MXenergy is soliciting consents from the noteholders for proposed amendments that would eliminate or amend substantially all of the restrictive covenants and modify a number of the events of default and some other provisions, including the change-of-control provisions.

Consents are needed from holders of at least a majority of the outstanding notes.

Holders who wish to participate must tender all of their notes, and holders who tender will be deemed to have given consent.

The offer is conditioned on, among other things, the company refinancing and replacing its revolving credit facility and hedge facility, the company amending its current credit facility with Denham Commodity Partners, the conversion of MXenergy's series A convertible preferred stock into common stock, the creation of a management incentive plan and the receipt of any consents from government bodies or authorities that are required.

The new notes will be guaranteed by all of the company's subsidiaries that guarantee the existing notes. They will also be secured on a third-lien priority basis by substantially all of the assets of the company and the guarantors, provided that the new notes will have a first-priority security interest on a notes escrow account that will have cash, cash equivalents or government securities in an amount sufficient to make two semiannual interest payments.

The exchange offer and consent solicitation began June 29 and are being made only to accredited investors inside the United States and certain non-U.S. investors located outside the United States who have delivered an eligibility letter.

The information agent is Global Bondholder Services Corp. (866 387-1500 or, for banks and brokers only, 212 430-3774).

MXenergy is a retail natural gas and electricity supplier based in Stamford, Conn.

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