Sequa pulls plug on acquisition, drops amendment to convertibles

New York, April 19 – Sequa Petroleum NV said that it has abandoned its planned acquisition of a 15% stake in the Gina Krog field and will not implement the amendment to its 5% convertible bonds due 2020.

The terms of the convertibles will remain unchanged, and trading in the securities was unblocked on Tuesday.

Sequa said in a news release that the alteration in its plan was due to “current market conditions.”

Holders had previously given consents to amend the $204.4 million of convertibles.

Voting ended at 11 a.m. ET on April 8, extended from 11 a.m. ET on April 4.

As announced March 24, the company was asking for consents to allow for new financing.

The company was requesting approval to:

• Grant security required for the issue of new bonds;

• Extend the maturity of the convertibles to April 29, 2022 from April 29, 2020;

• Lower the conversion price of the convertibles to $2.50 per share from $3.50 per share;

• Amend the interest rate of the convertibles so that it steps up to 7% on April 29, 2019 and 9% on April 29, 2021; and

• Remove the provisional call from the convertibles allowing Sequa to redeem the convertibles if its shares trade above a 140% hurdle for 30 days out of 45.

Approval of the changes required votes from holders of 75% of the bonds.

Sequa announced the planned new financing on March 16, saying that in the “new oil price environment” it intended to pursue a strategy focused on the increased opportunities to acquire, optimize and monetize development and producing assets. Specifically the company was seeking to acquire a 15% interest in the Gina Krog field.

To fund the acquisition, Sequa had planned to issue $475 million of secured bonds.

The offering was to include $200 million of second-lien senior secured high-yield bonds due 2021 to be issued by subsidiary Tellus Petroleum AS via lead manager and bookrunner Anoa Capital SA.

In addition Sequa Petroleum NV announced $275 million of senior secured first-lien bonds due 2019.

Sequa Petroleum is a London-based energy company.

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