Energy XXI Gulf Coast Amends Debt Exchange Offer, Consent Solicitation

Energy XXI Gulf Coast has amended its previously announced exchange offer and consent solicitation in respect of its 10% Senior Notes due 2013 (the "Senior Notes"), pursuant to its confidential offering circular and consent solicitation statement dated September 4, 2009 (the "Offering Circular") and the accompanying letter of transmittal and consent (together with the Offering Circular, the "Offering Documents").

The Company commenced an offer to exchange up to $360 million principal amount (the "Maximum Acceptance Amount") of outstanding Senior Notes properly tendered (and not validly withdrawn) and accepted by the Company for its newly issued 16% Second Lien Junior Secured Notes due 2014 (the "Second Lien Notes"), subject to proration and reduction depending on the aggregate principal amount of Second Lien Notes sold in a concurrent private placement. In conjunction with the exchange offer, the Company also commenced soliciting consents from holders of the Senior Notes to certain proposed amendments (the "Proposed Amendments") to the indenture under which the Senior Notes were issued, which, if effected, would modify certain of the restrictive covenants in that indenture in order to permit the issuance of the Second Lien Notes.

The Company is amending the terms of the exchange offer by decreasing the Maximum Acceptance Amount from $360.0 million to $347.5 million. Accordingly, the Company is offering to purchase only up to $347.5 million aggregate principal amount of its Senior Notes, upon the terms and subject to the conditions set forth in the Offering Documents, as amended by this press release.

The Withdrawal Date was 5:00 p.m., New York City time, on Friday, September 18, 2009. Consequently, holders who have tendered and not withdrawn their Notes prior to that time are not entitled to withdraw their Senior Notes, and similarly, holders of Senior Notes who tender their Senior Notes after the Withdrawal Date, but on or prior to the Expiration Date, may not withdraw their tendered Senior Notes. The exchange offer and consent solicitation will continue to expire at 12:00 midnight, New York City time, on October 2, 2009, unless extended or earlier terminated by the Company.

Notwithstanding any other provision of the exchange offer, the Company's obligation to accept for exchange, and to exchange, any of the Senior Notes validly tendered is subject to the satisfaction or waiver of the following conditions, among others, prior to the settlement date of the exchange offer:

  • There having been validly tendered and not withdrawn pursuant to the exchange offer Senior Notes having an aggregate principal amount of not less than $311.0 million (the "Minimum Tender Condition");
  • The receipt of the Requisite Consents and execution of a supplemental indenture providing for the Proposed Amendments (the "Supplemental Indenture Condition");
  • The Company having closed or concurrently closing the sale of Series B Second Lien Notes in an aggregate principal amount of not less than $50.0 million in the private placement (the "Private Placement Condition"); and
  • The Company having obtained an amendment or amendment and restatement to, or a waiver under, its existing Amended and Restated First Lien Credit Agreement, the effect of which is that the consummation of the exchange offer and concurrent private placement and the issuance of the Second Lien Notes and payments in respect of such notes will not be prohibited under such facility (the "Bank Condition").

The Company has been advised by the exchange agent for the exchange offer that, as of 5:00 p.m., New York City time, on September 18, 2009, approximately $574.5 million principal amount of Senior Notes had been tendered and not withdrawn. In addition, the Company has entered into a purchase agreement, subject to certain conditions to closing, with a limited number of qualified institutional investors (as defined in Rule 144A under the Securities Act) and institutional accredited investors for the private placement of an aggregate $60.0 million principal amount of Series B Second Lien Notes and the issuance of 13,224,720 shares of common stock of Energy XXI (Bermuda) Limited. The Company has also entered into an amendment to its existing Amended and Restated First Lien Credit Agreement relating to the consummation of the exchange offer and concurrent private placement.

The Second Lien Notes have not been registered under the Securities Act of 1933, as amended (the "Securities" Act"), and may not be sold in the United States without registration or an applicable exemption from registration requirements. The exchange offer is being made, and the Series A Second Lien Notes are being offered and issued, in reliance upon the exemption provided by Section 3(a)(9) of the Securities Act from the registration requirements of the Securities Act. The securities being sold in the concurrent private placement are being offered and issued in reliance upon the exemption provided by Section 4(2) of the Securities Act from the registration requirements of the Securities Act.

 

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