PA Resources extends acceptance period for early conversion of bonds

By Toni Weeks

San Diego, Dec. 17 - PA Resources AB said it has extended the acceptance period for its offer to holders of its bonds due 2014 to convert their bonds early. The new deadline is Dec. 20 at 11 a.m. ET.

The company said that owners of the convertibles representing about 85% of the total amount have accepted the offer to set off their convertible bonds against newly issued B shares.

As previously reported, the company is seeking an acceptance level of more than 90% of the total nominal amount of the bonds. Otherwise, the underwriting agreement entered into with Carnegie Investment Bank AB may be terminated.

If the conditions for the offer are not met, the company said its board of directors will apply for a formal corporate restructuring process, and if that process is initiated, there will be a risk that the convertible bondholders will lose their entire investment, according to a press release.

PA Resources has a bond interest payment of SEK 90 million due on Dec. 22, the release noted.

The company said if the 90% level is reached for the offer, the board of directors will decide upon the previously announced fully underwritten rights issue of about SEK 700 million, which it is contemplating at a subscription price of SEK 0.10 per new share.

As already noted, Gunvor Group intends to participate for SEK 200 million. If the rights issue is approved, the right to subscribe for new shares will be distributed by about 50% to the current shareholders in the company and the remaining half to shareholders who have obtained shares through set-off of convertible bonds in the offer.

The company previously set the subscription price for the convertible bonds at SEK 0.15 per new share, meaning each convertible bond entitles the holder to subscribe for 116 new shares through set-off of an amount of SEK 17.40 per convertible bond. The amount corresponds to the nominal value of the convertible bond plus accrued interest as of Nov. 6.

The total nominal value of the convertibles, including accrued interest, is SEK 1,072,000,000.

Several large bondholders, whose holdings total more than 40% of the outstanding convertibles, have said that they support the proposed transactions and planned to participate in the offer, according to a previous press release.

As already stated, the offer and the rights issue will boost equity by about SEK 1,576,000,000, while reducing net debt by about SEK 1.5 billion.

PA Resources is an oil and gas company based in Stockholm.

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