Max Petroleum PLC MXP Debt Restructuring

  Max Petroleum PLC (MXP) - Debt Restructuring

RNS Number : 1181S
Max Petroleum PLC
27 November 2012






                                                              27 November 2012



                                      

                              MAX PETROLEUM PLC

   ("Max Petroleum", the "Company"and, together with its subsidiaries, the
                                   "Group")

                              Debt Restructuring

Max Petroleum, an oil  and gas exploration and  production company focused  on 
Kazakhstan, is  pleased  to  announce  today  its  intention  to  implement  a 
refinancing  and  a  comprehensive  restructuring  of  its  outstanding   debt 
facilities (the "Restructuring"). 

The terms  of  the  Restructuring,  which  comprise  the  refinancing  of  the 
Company'sexisting  senior  credit  facility   with  Macquarie  Bank   Limited 
("Macquarie  Bank")  and  the  restructuring   of  its  $85.6  million   6.75% 
convertible  bonds  (the  "Bonds"),  have  the  support  of  Macquarie   Bank, 
Bondholders representing greater  than 90%  of the outstanding  Bonds and  the 
Company's major shareholders representing  approximately 30% of the  Company's 
outstanding ordinary shares of 0.01p each (the "Shares').

Key terms of the Restructuring:

§ The Group has entered  into a new senior  secured US$90 million credit  line 
agreement  (the  "Sberbank   Facility")  with  SB   Sberbank  JSC   ("Sberbank 
Kazakhstan"), whereby:

o The Sberbank Facility will be made available to draw down at the  Company's 
discretion in two tranches:

o Up to US$60 million in December 2012, conditional, among other things, upon
the approval of the terms of  the Restructuring by the Company's  shareholders 
and Bondholders; and

o Up to a further US$30 million  as soon as certain conditions precedent  are 
met, including the registering of security and obtaining requisite  government 
regulatory approvals, which are expected to be completed in March 2013.

o Interest rate of 11% per annum, payable monthly;

o Five-year  term  maturing in  November  2017, with  quarterly  amortisation 
beginning in March 2014;

o The  approved  uses of  the  Sberbank  Facility include  repayment  of  the 
existing senior credit facility with Macquarie Bank, funding the cash  portion 
of the tender  offer to be  made to Bondholders  (see description below),  and 
funding the Company's shallow drilling programme;

Sberbank Group will be  granted a call option  over approximately 197  million 
shares in Max Petroleum held by Macquarie Bank

§ Cancellation of the Company's existing senior credit facility with Macquarie
Bank whereby Macquarie Bank  will receive US$47 million  plus all accrued  but 
unpaid interest in December 2012 and a  further US$3 million in March 2013  in 
full settlement of all monies owed by the Group;

§ Holders of the  Bonds will be  offered a combination of  cash and Shares  as 
consideration for the  proposed restructuring  of the  terms of  the Bonds  as 
follows:

o Bondholders will be  invited to participate in  a tender offer pursuant  to 
which they may tender Bonds to the Company with an aggregate principal  amount 
of up to US$17.1 million. The Company will pay to tendering Bondholders a cash
amount representing 50% of the principal  amount tendered (up to a maximum  of 
US$8.6 million)  and  the  Bonds  accepted  into  the  tender  offer  will  be 
cancelled; 

o The balance  of the principal  amount of the  Bonds (including  capitalised 
interest) will be  converted into Shares  at a price  of 5p per  Share in  two 
tranches:

o The first tranche of up to  US$56.7 million of Bonds and accrued  interest, 
will be converted into 709 million Shares in December 2012, with the remaining
outstanding Bonds  to  be  mandatorily  converted  following  the  receipt  of 
requisite Kazakh regulatory approvals (expected in the first half of 2013);

o Until conversion,  the terms  of the  remaining outstanding  Bonds will  be 
modified such that the coupon will be 10% per annum (with interest payable  in 
kind) and the maturity  date will be  extended to 8 March  2018 (though it  is 
expected that these remaining Bonds will convert into Shares during 2013);

o Shares issued to Bondholders as  part of the Restructuring will be  subject 
to a 90 day lock up from the date of the initial conversion; and

o It is expected  that a total  of approximately 919  million Shares will  be 
issued to Bondholders pursuant  to the Restructuring  (assuming that the  cash 
tender offer is taken up in full and that all outstanding Bonds are  converted 
into Shares by 31 March 2013).

§ Following completion of  the Restructuring, the Group's  total debt will  be 
reduced from approximately $140 million to approximately $90 million with  net 
cash  of  approximately  $30  million  made  available  for  drilling   future 
production and exploration wells and associated expenses.

§ Conditional upon the  implementation of the  Restructuring, the Company  has 
agreed to appoint to the Board of Directors a Non-Executive director nominated
by the Bondholders.

§ As part of the Restructuring, the Company intends to reprice its outstanding
options held by employees of the Company with exercise prices above 5p down to
5p per Share, as well as issue additional grants at 5p per Share to bring  the 
aggregate number of options outstanding up  to 10% of the Company's  pro-forma 
fully diluted Shares outstanding post-Restructuring. Any new grants will  vest 
over a three-year period with no vesting to occur prior to the full conversion
of the Bonds into Shares.

§ Sberbank CIB is acting as the exclusive financial advisor to the Company  in 
relation to the Restructuring.



The Restructuring is conditional on Bondholder and shareholder approval.  The 
Company has received written assurances from Bondholders representing  greater 
than 90% of the outstanding Bonds and shareholders representing  approximately 
30% of  the  Shares  to vote  in  favour  of the  Restructuring.  Notices  to 
Bondholders and  shareholders  convening  separate  meetings  will  be  issued 
shortly and it is expected that both  meetings be held at the offices of  Akin 
Gump LLP, Eighth Floor, Ten Bishops Square, London E1 6EG on 20 December  2012 
at 10.00am for Bondholders and 11.00am for shareholders (London time).



James Jeffs and Bob Holland, Executive Co-Chairmen of Max Petroleum commented:

"First and foremost we would like to thank Sberbank for making this investment
at such a critical transition point  for our Company and our shareholders  for 
their patience as we worked to  negotiate this refinancing. Secondly we  would 
like to thank the employees of Max who have continued to advance the  business 
towards  our  operational  targets  whilst   we  put  in  place  a   financial 
underpinning for  long  term  growth.  Thirdly we  would  like  to  thank  our 
bondholders for the commitment they are showing to the future of Max Petroleum
by agreeing to exchange a position as provider of debt to one of ownership  of 
the business as shareholders. We would lastly also like to thank Macquarie for
their support over  many years since  they first became  our lender more  than 
five years ago."

Michael Young, President and Chief Financial Officer commented:

"The future  opportunities for  Max to  grow production  and reserves  in  the 
post-salt remain exciting and offer valuable upside to our shareholders.  This 
refinancing enables us to focus on  maximizing value through the drill bit  by 
implementing our post-salt drilling  programme and to  remove the overhang  of 
debt that we previously faced coming to maturity in 2013."

Shukhrat Sadyrov, Vice-Chairperson of the Board of Subsidiary Bank Sberbank of
Russia Joint-Stock Company commented:

"We are  very pleased  to be  working  alongside Max  Petroleum to  help  them 
develop their  business in  Kazakhstan.  The deal  was completed  with  strong 
support from the investment  banking team of Sberbank  CIB and shows the  high 
synergy potential  of  Sberbank  CIB's investment  banking  business  and  the 
subsidiary bank in Kazakhstan. As a lender to Max Petroleum, we are  confident 
that all stakeholders in the Company will benefit from this unique transaction
as the  Company  profitably  grows  its business  and  in  turn  supports  the 
development of Kazakhstan."



Background on Sberbank

Sberbank of Russiais the largest bank in Russia and holds almost one third of
all Russian banking sector assets. The Central Bank of the Russian  Federation 
is the founder  and major  shareholder of Sberbank,  owning 50%  of the  total 
share capital  plus one  voting share.  Other  shares are  held by  more  than 
245,000 individual  and  institutional investors.  The  Bank has  the  largest 
distribution  network  in  Russia  with   over  19,000  offices  as  well   as 
subsidiaries in 20 countries including the CIS, Central and Eastern Europe and
Turkey. In September 2012, Sberbank completed the acquisition of DenizBank  AS 
which is  ranked  6th  among  private  and 9th  among  all  Turkish  banks  by 
consolidated total assets.

"Sberbank" SB JSCis a subsidiary bank  of "Sberbank of Russia" in  Kazakhstan; 
it has beensuccessfully working at the financial market of Kazakhstan for more
than five years.  The Bank takes  the 6^th  place by assets  volume among  all 
second-tier banks of Kazakhstan.  As of today "Sberbank"  SB JSC has a  branch 
network consisting of 92 organization  departments, 13 of which are  branches. 
Central office of the Bank is in Almaty.

Sberbank CIB: the Corporate & Investment Banking Business was created as  part 
of theintegration of Sberbank of Russia and Troika Dialog. Sberbank CIB's key
areas of  activity are  corporate  financing^*, investment  banking  services, 
trade operations with  securities, and  private equity.  Sberbank of  Russia's 
Corporate  &  Investment  Banking   Business  provides  integrated   financial 
solutions and investment advisory services to its clients, which include major
corporations,  financial  institutions,  sovereign  states  and  federal   and 
sub-federal government bodies and organisations.

*Financing provided by OJSC "Sberbank of Russia"



Enquiries:



Max Petroleum Plc Michael Young                       Tel: +44 (0)207 355 9590

                 President   and   Chief   Financial 
                  Officer

                  Tom Randell

                  Director of Investor Relations

                  
College Hill      David Simonson/ Anca Spiridon       Tel: +44 (0)207 457 2020


WH Ireland Ltd    Daniel Bate / Katy Mitchell         Tel: +44 (0)161 832 2174

                                                     
Macquarie Capital Steve   Baldwin/   Jeffrey    Auld/ Tel: +44 (0)203 037 2000
                  Nicholas Harland

                  
Oriel Securities  Michael Shaw / Ashton Clanfield     Tel: +44 (0)207 710 7600
Sberbank CIB      Angelo Morganti                     Tel:+79636440625







                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


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