InterOil seeks waiver from holders of NOK 310 million 15% bonds

By Jennifer Chiou

New York, Oct. 26 - InterOil Exploration and Production ASA submitted a waiver request via a notice from trustee Norsk Tillitsmann for holders of its NOK 310 million of 15% senior secured callable bonds due April 6, 2014.

Under the current loan agreement, the security for the bonds includes a pledge over receivables of Switzerland InterOil Exploration SA. The issuer stated that it will not be able to provide pledged accounts for two bank accounts held by the Swiss subsidiary as UBS will terminate its relationship with the subsidiary if the accounts are pledged.

That said, InterOil is looking to holders to waive the pledge requirement.

In addition, the company is requesting confirmation that the bonds won't be declared in default due to a cross default from InterOil Peru SA shortfalls. Under the bank facility agreement with Citibank NA and the Peru company, there are clauses regarding minimum production levels on a rolling 12 and six-month basis as well as a minimum current ratio of assets against liabilities.

InterOil informed Norsk that it will be difficult for InterOil Peru to meet these requirements.

The trustee said that it has granted a waiver for the above matters, and bondholders may submit a written protest to that decision by Nov. 9.

In a letter to holders dated Oct. 21, the Oslo-based exploration and production company said that Citibank has provided it with a de facto waiver from negative covenants by "accepting our shortfall." InterOil added that it is in constant dialogue with the bank.

Holders may direct questions to Jens Samuelsen of Norsk Tillitsmann.

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