InterOil holders OK conversion of some 6% bonds, extension of others

By Sarah Lizee

Olympia, Wash., Dec. 30 – InterOil Exploration and Production ASA said holders of its 6% senior secured bonds due 2020 met on Dec. 30 and approved conversion of 35% of the outstanding principal amount, or $13,102,396, to equity and extension of the maturity date by six years to Jan. 31, 2026 for the remaining bonds.

Specifically, $13,482,365.47 of the bonds would be converted in total, which includes accrued interest, and $24,333,020 would remain outstanding.

In addition, the bonds will be amended so that

• The definition of hydrocarbon resources would be amended to include the subsidiaries’ interest in Argentina;

• The interest payment dates would be changed to mean Jan. 31 and July 31 of each year;

• The definition of change of control would include a carve-out for acquisitions made by Magnus Capital SA and Genipabu Investments LLC;

• A new definition of permitted debt would be included to permit subordinated debt;

• The interest rate would be amended to 7½% from 6%;

• The first interest payment date would be July 21, 2020 instead of Jan. 22, 2020;

• Any accrued interest will be paid simultaneously with the new first interest payment date;

• A new event of default provision would be included for a breach of subordination agreements;

• An amendment to a clause so that the required majority vote is amended to a simple majority of the voting bonds represented from a majority of at least 2/3 of the voting bonds represented; and

• Any other amendments necessary due to the conversion and other requested amendments.

Bondholders representing at least 2/3 of the voting bonds had to vote in favor of the resolution to pass. In order to have a quorum, at least half of the voting bonds had to be represented at the meeting.

“If approved, the conversion of bonds to equity and amended terms will significantly strengthen InterOil’s balance sheet and improve our ability to finance our current operations and support further growth in Latin America,” Hugo Quevedo, InterOil’s chairman, said in a previous news release.

After conversion, InterOil’s consolidated group equity will change from negative $6.1 million, as per Sept. 30, to about $6 million.

Annual interest costs will be reduced by about $400,000 per annum.

The proposed conversion of bonds is conditional upon approval by InterOil’s shareholders at an extraordinary general meeting to be summoned on Jan. 16.

The conversion is proposed to be effectuated by a share capital increase at a subscription price equal to a discount of 20% from the volume-weighted average market price of the InterOil shares in the 60-calendar day period immediately preceding the bondholder’s meeting.

UP Colombia Holding AS is the guarantor of the bonds.

InterOil is an Oslo-based exploration and production company.

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