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The terms of the Restructuring, which comprise the refinancing of the Company’s existing senior credit facility with Macquarie Bank Limited (“Macquarie Bank”) and the restructuring of its $85.6 million 6.75% convertible bonds (the “Bonds”), have the support of Macquarie Bank, Bondholders representing greater than 90% of the outstanding Bonds and the Company’s major shareholders representing approximately 30% of the Company’s outstanding ordinary shares of 0.01p each (the “Shares’).

Key terms of the Restructuring:

The Group has entered into a new senior secured US$90 million credit line agreement (the “Sberbank Facility”) with SB Sberbank JSC (“Sberbank Kazakhstan”), whereby:

The Sberbank Facility will be made available to draw down at the Company’s discretion in two tranches:

Up to US$60 million in December 2012, conditional, among other things, upon the approval of the terms of the Restructuring by the Company’s shareholders and Bondholders; and

Up to a further US$30 million as soon as certain conditions precedent are met, including the registering of security and obtaining requisite government regulatory approvals, which are expected to be completed in March 2013.

Interest rate of 11% per annum, payable monthly;

Five-year term maturing in November 2017, with quarterly amortisation beginning in March 2014;

The approved uses of the Sberbank Facility include repayment of the existing senior credit facility with Macquarie Bank, funding the cash portion of the tender offer to be made to Bondholders (see description below), and funding the Company’s shallow drilling programme;

Sberbank Group will be granted a call option over approximately 197 million shares in Max Petroleum held by Macquarie Bank

Cancellation of the Company’s existing senior credit facility with Macquarie Bank whereby Macquarie Bank will receive US$47 million plus all accrued but unpaid interest in December 2012 and a further US$3 million in March 2013 in full settlement of all monies owed by the Group;

Holders of the Bonds will be offered a combination of cash and Shares as consideration for the proposed restructuring of the terms of the Bonds as follows:

Bondholders will be invited to participate in a tender offer pursuant to which they may tender Bonds to the Company with an aggregate principal amount of up to US$17.1 million. The Company will pay to tendering Bondholders a cash amount representing 50% of the principal amount tendered (up to a maximum of US$8.6 million) and the Bonds accepted into the tender offer will be cancelled;

The balance of the principal amount of the Bonds (including capitalised interest) will be converted into Shares at a price of 5p per Share in two tranches:

The first tranche of up to US$56.7 million of Bonds and accrued interest, will be converted into 709 million Shares in December 2012, with the remaining outstanding Bonds to be mandatorily converted following the receipt of requisite Kazakh regulatory approvals (expected in the first half of 2013);

Until conversion, the terms of the remaining outstanding Bonds will be modified such that the coupon will be 10% per annum (with interest payable in kind) and the maturity date will be extended to 8 March 2018 (though it is expected that these remaining Bonds will convert into Shares during 2013);

Shares issued to Bondholders as part of the Restructuring will be subject to a 90 day lock up from the date of the initial conversion; and

It is expected that a total of approximately 919 million Shares will be issued to Bondholders pursuant to the Restructuring (assuming that the cash tender offer is taken up in full and that all outstanding Bonds are converted into Shares by 31 March 2013).

Following completion of the Restructuring, the Group’s total debt will be reduced from approximately $140 million to approximately $90 million with net cash of approximately $30 million made available for drilling future production and exploration wells and associated expenses.

Conditional upon the implementation of the Restructuring, the Company has agreed to appoint to the Board of Directors a Non-Executive director nominated by the Bondholders.

As part of the Restructuring, the Company intends to reprice its outstanding options held by employees of the Company with exercise prices above 5p down to 5p per Share, as well as issue additional grants at 5p per Share to bring the aggregate number of options outstanding up to 10% of the Company’s pro-forma fully diluted Shares outstanding post-Restructuring. Any new grants will vest over a three-year period with no vesting to occur prior to the full conversion of the Bonds into Shares.

Sberbank CIB is acting as the exclusive financial advisor to the Company in relation to the Restructuring.

The Restructuring is conditional on Bondholder and shareholder approval.  The Company has received written assurances from Bondholders representing greater than 90% of the outstanding Bonds and shareholders representing approximately 30% of the Shares to vote in favour of the Restructuring.  Notices to Bondholders and shareholders convening separate meetings will be issued shortly and it is expected that both meetings be held at the offices of Akin Gump LLP, Eighth Floor, Ten Bishops Square, London E1 6EG on 20 December 2012 at 10.00am for Bondholders and 11.00am for shareholders (London time).

Source: www.maxpetroleum.co.uk

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