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Oil storage, shipbuilding and bunker supply group Titan Petrochemicals Group Limited has announced the completion of its previously announced exchange offer and consent solicitation relating to its outstanding 8.50% guaranteed senior notes due 2012.

The exchange offer was completed on July 27, 2010. The aggregate principal amount of the existing notes accepted for exchange by the company on the settlement date was US$209,490,000.

The company issued US$78,728,000 aggregate principal amount of the convertible notes and US$14,193,000 aggregate principal amount of the new PIK (payment in kind) notes, and paid US$43,154,940 in cash, in exchange for the tendered existing notes.

Goldman Sachs (Asia) L.L.C. acted as the global coordinator, lead arranger and co-dealer manager for the exchange Offer and ING Bank N.V., Singapore Branch acted as the co-arranger and co-dealer manager. The exchange and information agent for the Exchange Offer is Lynchpin Bondholder Management.

The convertible notes are convertible into new shares at the initial conversion rate of 10,915 conversion shares per US$1,000 in principal amount of convertible notes converted, subject to adjustment.

Based on an aggregate principal amount of US$78,728,000 being issued, conversion in full of the convertible notes at the initial conversion price of approximately US$0.0916 (approximately HK$0.7099) per conversion share will result in the issue and allotment of up to 859,316,064 conversion shares.

Today's announcement comes three months after the company said it would be difficult to achieve sufficient cash flow in the near future to meet its debt and other financial obligations.

Titan posted a net loss of HK$536 million (US$69 million) in 2009, slashing losses by around two-thirds against the net loss of HK$1.6 billion posted in 2008.

Sales revenue dropped by HK$5.8 billion, or 81.9 percent, last year to HK$2 billion, compared with HK$7.8 billion in 2008.

At the end of 2009, the Titan's cash and bank balance stood at HK$358 million, much lower than its interest-bearing loans of HK$2.96 billion.

In December 2009, debt-laden Titan announced its plan to restructure US$315.36 million worth of 8.50 percent guaranteed senior US dollar notes, due in 2012, to improve its capital structure and extend the notes' maturity.

Titan said it was offering bondholders up to US$62.8 million worth of new notes due 2015, up to 969.7 million new Titan shares and an unspecified cash payment, in exchange for the outstanding 8.50 percent bonds.

The new shares represented approximately 14.8 percent of the issued share capital of the company and around 12.9 percent of the issued share capital as enlarged by the issue of the new shares.

The new notes were due in 2015 with a single repayment, bearing interest at the rate of 8.50 percent per annum, payable semi-annually in arrears on 15 March and 15 September of each year, commencing 15 March 2010.

However, Titan later withdrew the offer after bondholders holding less than 90% of the notes agreed to the offer.