DOME <DMP> SAYS MOST LENDERS SUPPORT DEBT PLAN
Dome Petroleum Ltd said a
majority of a group of 56 major creditors support the company's
revised proposal to restructure debt of more than 6.1 billion
Canadian dlrs.
    Outlining terms of the plan circulated to the lenders
earlier this week, the company said it is seeking approval in
principle for the proposal "within the next several weeks" in
order to implement the debt rescheduling by June 30, 1987.
    "Although at today's price levels it only allows the company
to struggle on, benefits appear as oil prices rise," Dome
chairman J. Howard Macdonald said in a statement.
    "We believe the plan is a rational one, and will be valid
under a range of circumstances," chairman Macdonald said.
    The lenders previously agreed to an interim debt
rescheduling until June 30 to allow Dome time to negotiate a
long-term recapitalization.
    The debt proposal is designed to ensure continued existence
of the company, which would see lenders get maximum recovery of
their loans, Dome said.
    The plan would maintain debt levels within Dome's ability
to pay, subject to minimum debt service levels for each lender.
    Dome said the debt proposal offers measures such as equity
conversion options and reclassification to lower interest
bearing categories of debt to accomplish its objectives.
    Under certain circumstances, lenders will have the option
to convert all or part of their debt to common shares at a
pre-determined conversion rate upon plan implementation.
    The various conversion rates remain to be set through
negotiations, and the company said it is impossible to predict
the extent to which the conversion option will be exercised and
the amount of dilution that may result.
    Converting debt to common shares after the plan is
implemented would be at a much higher conversion price, Dome
said.
    Common shareholders will be asked to approve the plan
before it is put in place.
    Debt that remains after share conversion will either
receive scheduled payments based on contract interest rates and
a 15 to 20 year pay-out, or interest rates indexed to oil
prices. The company will use both an annual security-to-debt
ratio test and a monthly cash flow test to classify which
interest payments are paid on the different portions of debt.
    To achieve a stable operating base for the company, the
plan provides for deducting operating costs, capital
expenditures and general and administrative expenses before the
remaining available cash flow is distributed to lenders, Dome
said.
    The proposal also assumes efforts will continue to operate
the business as efficiently as possible, it said.
    As the company previously said, debt payments from cash
flow be divided into two broad categories, secured and
unsecured creditors.
    Terms of the debt plan include paying institutional
unsecured creditors, comprising mostly banks who hold private
debt, from cash flow generated by unpledged assets. This
portion will get a fixed low interest rate under a 15-year
repayment schedule.
    Remaining institutional unsecured debt will get paid
through convertible, oil indexed unsecured debt that matures in
20 years, or any available excess cash flow, or conversion to
equity. Any institutional lender also has the option of taking
all or part of its debt in common shares.
    To offer public unsecured debtholders liquidity, Dome said
they can also convert all or part of their debt to common
shares when the plan is implemented. Any debt leftover would be
exchanged for a convertible debenture with an interest rate
linked to oil prices.
    Secured creditors would get paid from cashflow generated by
the assets pledged against their debt under a complex formula,
the company said.
    Any shortfalls under the formula could also be converted to
oil-linked debentures.
 Reuter
