Friday, independent energy company Energy XXI Gulf Coast, Inc., an indirect wholly owned subsidiary of Energy XXI, Inc. Bermuda Limited (EXXI) said that it has commenced an exchange offer and consent solicitation in respect of its 10% Senior Notes due 2013 or the "Senior Notes".
The Houston-based company said it has commenced an offer to exchange up to $360 million principal amount outstanding Senior Notes for its newly issued 16% Second Lien Junior Secured Notes due 2014, subject to proration and reduction to $311 million principal amount of Senior Notes, depending on the aggregate principal amount of Second Lien Notes sold in a concurrent private placement.
In conjunction with the exchange offer, the company is also soliciting consents from holders of the Senior Notes to certain proposed amendments to the indenture under which the Senior Notes were issued in order to permit the issuance of the Second Lien Notes.
A tender of Senior Notes in the exchange offer will also constitute a consent in favor of the Proposed Amendments. The adoption of Proposed Amendments requires the consents of holders of a majority in principal amount of Senior Notes.
In exchange for each $1,000 principal amount of Senior Notes properly tendered and not validly withdrawn and accepted by the company by September 18, participating holders of Senior Notes will receive $800 principal amount of Second Lien Notes, and after the Early Tender Date on October 2, participating holders will receive $750 principal amount of Second Lien Notes. Tendered Senior Notes may be withdrawn prior to September 18.
The company said it has received indications from holders of an aggregate principal amount of about $345 million of Senior Notes of their intent to participate in the tender.
The aggregate principal amount of Second Lien Notes that may be issued pursuant to the exchange offer in exchange for Senior Notes will be at least $248.8 million and up to a maximum of $288.0 million, depending on the aggregate principal amount of Second Lien Notes and common stock sold in a concurrent private placement.
Concurrently with the closing of the exchange offer, the company will sell for cash in a private placement an aggregate principal amount of Second Lien Notes of at least $50.0 million and up to a maximum of $89.0 million.
Energy XXI said that its obligation to exchange any of the Senior Notes is subject to the satisfaction, among others, of there having been validly tendered and not withdrawn pursuant to the exchange offer Senior Notes having an aggregate principal amount of not less than $311 million and the company having closed or concurrently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.
EXXI closed Thursday's regular trading at $0.79.
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