Norse Energy Continues Selling Pieces of the Company

Norse Energy, with leased acreage in both the Marcellus and Utica Shales in New York State, has been fighting to keep the company afloat until New York finally allows hydraulic fracturing and they can take advantage of their leaseholds. But to keep holding on, they’ve sold off bits and pieces of their leaseholds, as well as bits and pieces of the company. A few weeks ago they converted $3.5 million of bonds (or debt) into stock (or ownership) of the company (see this MDN story).

Yesterday, we learned they’ve sold off another $12.5 million of the company in another bonds for stock swap deal. And now they’re making the same offer to all of their bondholders: Let’s make a deal—soon.

Norse Energy Corp. ASA announces that it has entered into an agreement with funds managed by Pioneer Investment Management, Inc. to convert bonds in NEC02 at nominal value USD 12,455,050 into Norse shares. The transaction is structured in two tranches:

In tranche one, the Pioneer funds subscribe for 21,195,456 new ordinary shares in Norse at a subscription price of NOK 0.37 per share against delivering bonds with nominal value USD 1,331,463. The equity issue will be settled by conversion of the Pioneer funds’ claim on Norse from the purchase of these bonds, while Norse will pay the Pioneer funds the accrued interest. The shares are issued under the power of attorney granted the Board of Directors of Norse in the Extraordinary General Meeting on 22 November 2011. The new shares have nominal value of NOK 0.36883488 per share.

In tranche two, the Pioneer funds shall deliver bonds with nominal value of up to USD 11,123,587.00 against receiving new ordinary shares in Norse at a subscription price of NOK 0.37 per share. These shares will be issued in the settlement of the Conversion Offer as described below, as the Pioneer funds have pre-subscribed for such shares in the Conversion Offer.

The subscription price of NOK 0.37 per new share represents a 48% premium to the closing price for the Norse shares at the Oslo Stock Exchange on 25 January 2012.

The agreement with the Pioneer funds means that Norse reduces its outstanding NEC02 bond debt by approx. USD 12.5 million and improved its equity capital with a corresponding amount.

“Through this transaction with the Pioneer funds and other deals as previously announced, Norse has reduced its debt by approximately USD 37 million since the middle of 2011 through asset sales and issuance of equity above the market price. Norse is thereby taking significant steps to strengthen the financial condition of the company”, commented Norse CEO Mark Dice. “We welcome a new major shareholder in the Pioneer funds”, concluded Dice.

Conversion Offer to remaining bondholders

Norse is pleased to announce an offer to all its bondholders to convert bonds to equity in a book-building process that will be held open from Thursday 26th January 08.00 CET until Friday 27th January 2012 17.00 CET. Holders of Norse bonds are offered to tender their bonds at par value for new shares in Norse at a subscription price of NOK 0.37 or such higher price as set in the book-building process. Accrued interest for the tendered bonds will be paid in cash upon settlement. The Conversion Offer is limited to 297,260,031 shares, being the remaining amount available under the power of attorney granted the Board of Directors of Norse in the Extraordinary General Meeting on 22 November 2011. Shares will be allocated pro-rata in case of over-demand however Pioneer through its pre-subscription is guaranteed allocation of shares at the subscription price set in the book-building.

Settlement of the Conversion Offer is expected to take place on or about 6 February 2012 following a prospectus for the new shares being filed and approved by Finanstilsynet (Norwegian Financial Supervisory Authority).

Holders of bonds in Norse may contact Pareto Securities AS Fixed Income at +47 2287 8770 to participate in the Conversion Offer.*

*Norse Energy (Jan 25, 2012) – Norse Energy Corp ASA: Norse Announces Conversion of ~ $12.5 Million of Bonds Held by Pioneer Funds and Offer to Remaining Bondholders