XXI Century offers Eurobond conversion into equity

XXI Century on Friday offered noteholders to exchange its Eurobond notes for equity at a proportion of 763 new ordinary shares per USD 1,000 note (USD 175 mln was issued). This was part of XXI Century’s broader restructuring proposal, which also suggests the attraction of a new strategic investor, Ovaro (controlled by Renaissance Capital), to infuse net USD 17.2 mln in exchange for a 60% stake in the company (52% on a fully diluted basis). Accounting for the share subscription price for Ovaro (USD 0.07 per share), 763 new shares are valued at USD 57 for noteholders. Should all noteholders accept the exchange offer, their combined stake in the enlarged equity would amount to almost 31% (or 27% on a fully diluted basis). Those noteholders that decline conversion will receive net cash proceeds from the share sale on the open market in an amount, corresponding to the above ratio. Based on the new share subscription price, XXI Century’s total equity is now valued at USD 33.3 mln. According to the restructuring proposal, the company will also attempt to arrange additional borrowing to finance projects for USD 50 mln over the medium term. A noteholders meeting is scheduled for January 10, 2011 in London. Quorum is holders of no less than 75% of the total principal amount (25% for adjourned meeting), and for the extraordinary resolution to be passed, 75% of votes are required. A shareholder meeting to consider the new equity injection from Ovaro is scheduled for January 25, 2011.