InterOil Exploration & Production begins consent bid for 15% bonds

By Angela McDaniels

Tacoma, Wash., Nov. 3 – InterOil Exploration & Production ASA began a consent solicitation for its 15% senior callable bonds due 2014, according to a notice from trustee Nordic Trustee ASA.

InterOil has signed an agreement to sell subsidiary Interoil Exploration and Production Latin America AS to United Oilfield Colombia Inc. for $1 and the assumption of intercompany debt. The sale is subject to bondholder approval.

The Latin America subsidiary is the holding company for InterOil’s shares in Interoil Peru SA and North Oil Services SAC. It does not hold any other assets and has $44 million of intercompany debt to Interoil Peru.

The company said that Interoil Peru will not have any operations after its license agreements expire on April 5 and that North Oil Services is under liquidation and does not have any activities.

In addition, InterOil has begun a refinancing process to strengthen its financial position and is seeking some changes to the bond agreement that it said will help facilitate the refinancing.

In all, the company is asking noteholders to approve the sale of the Latin America subsidiary, the release of the pledge in the Latin America subsidiary, including the pledge over its inventory, operating assets, receivables and bank accounts, and the following amendments:

• Change the definition of “subsidiaries” by deleting Interoil Exploration and Production Latin America and North Oil Services;

• Change the definition of “guarantees” by deleting reference to North Oil Services;

• Change the definition of “preferred senior debt borrowers” by deleting reference to Interoil Peru;

• Change the definition of “share charge” by deleting reference to North Oil Services;

• Change the definition of “hydrocarbon resources” by deleting reference to block III and IV and Puli-B and Armero; and

• Change the notice period for summons to bondholders meetings.

According to the company, the reference to concessions Puli-B and Armero are no longer relevant because it no longer holds these concessions.

Noteholders will vote on the proposal at a meeting at 7 a.m. ET on Nov. 17 in Oslo.

The holders of at least half of the bonds must be represented at the meeting in order to form a quorum. The holders of at least half of the bonds represented at the meeting must vote in favor of the proposal in order for it to pass.

InterOil is an Oslo-based exploration and production company.

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