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Interoil Exploration and Production ASA : Refinancing proposal

Oslo, 23 December 2014: The Board of Directors of Interoil Exploration and Production ASA ("Interoil" or the "Company") today announces a comprehensive restructuring (the "Restructuring") proposal that will improve its position in Latin America, mitigate the Company's liquidity constraints and strengthen its balance sheet.

As reported in the stock exchange notice 27 October 2014 and in the Company's Q3 financial report, Interoil is facing financial and strategic challenges. The Company is suffering from a heavy debt burden. This undermines its ability to support initiatives, which would protect and potentially increase the value of the Interoil's assets. Furthermore, current cash forecasts show that its Colombian subsidiary will be unable to meets its commitments in January 2015.

A central element in the proposed solution is an equity issue directed towards Andes Energia Plc ("Andes"). Andes is a Latin American company, active in exploration, development and production of conventional and unconventional oil and gas resources. The Company is listed on the AIM London Stock Exchange and Buenos Aires Stock Exchange with a market cap of approximately GBP 180 million.

"We are pleased to announce a solution which will entail that Interoil is supported by an industrial owner with significant presence and competence in Latin America," says Thomas Fjell, CEO of Interoil, and he continues:

"We have worked intensively on a wide range of potential transactions over the last year. The alternatives have included strategic opportunities, capital raise and discussions with parties interested in selected assets and in the shares of the Company. The proposed solution stands out as the best alternative."

Andes' offer

Andes has committed to invest NOK 36.3 million in a private placement towards Andes (the "Private Placement") at a subscription price of NOK 0.11 per share. The subscription is conditional upon a successful restructuring of the Company's NOK 310 million bond loan (the "Bond") and the USD 6.2 million debt relating to Proseis AG (the "Proseis Debt"). The details of the Private Placement and the Restructuring are presented below.

"We look forward to becoming the majority shareholder of Interoil.  We have identified several areas where the companies can work together to realise synergies.  With our established presence, knowledge and network in the region, we expect to be able to support Interoil's activities in Colombia. We also expect that the strengthened balance sheet, will help restore normal credit lines and bank guarantees, which will provide further flexibility to Interoil's operations going forward," says Alejandro Jotayan, CEO of Andes Energia.

The Private Placement

New equity will be raised by way of a Private Placement of new shares for NOK 36.3 million, whereby Andes subscribes for 330,000,000 shares in Interoil at NOK 0.11 per share. Following the Private Placement and approval of the Restructuring as set out below, Andes will hold 51 per cent of the outstanding share capital.

Further details of the Private Placement have been set out in the notice of an Extraordinary General Meeting, dispatched by the Company shortly. The Private Placement is subject inter alia to approval by the Extraordinary General Meeting, by a bondholder meeting and by the creditors under the Proseis Debt.

The Restructuring

The Restructuring implies that Interoil will reduce its debt with approximately NOK 120 million. The NOK 310 million Bond and the USD 6.2 million Proseis Debt are replaced with a new USD 32 million bond loan (the "New Bond Loan"). The Private Placement and the Restructuring are mutually conditional upon each other.

The Company has approached the bond trustee to convene bondholders' meetings in order to consider the Company's request to amend and replace the Bond. Approval of the proposal will require consent from 2/3 of the Bond present at that bondholder meeting.

As part of the Restructuring, current bondholders will convert part of the Bond to 65,000,000 new shares in Interoil, equivalent to approximately 10 per cent of the shares outstanding after the Private Placement and the Restructuring. Further details and main terms and conditions of the New Bond Loan will be included in the summons for the bondholder meeting.

Way forward

The Restructuring and the Private Placement is subject to bondholder and shareholder approvals. A bondholder meeting is expected to be held on 19 January 2015, and shareholders will be summoned to an Extraordinary General Meeting to be held on 20 January 2015.

"The Board of Directors supports this proposal. It balances well the interests of the Company's financial stakeholders, and provides a solution to the Company's current challenges", says Leif Chr. Salomonsen, Chairman of the Board of Interoil.

Discussions with stakeholders will continue up to the EGM and bondholder meeting to ensure support for the proposed Restructuring.

The Private Placement will trigger an obligation for Andes to launch a mandatory offer for the remaining shares in Interoil.

Arctic Securities is acting as financial advisor to the Company.

 

For further information:

Presentation of offer

More about Andes Energia Plc on www.andesenergiaplc.com.ar

Interoil and Andes will hold a joint conference call in early January.

Contact:

IR@interoil.no

 

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Interoil Exploration and Production ASA is a Norwegian based exploration and production company - listed on the Oslo Stock Exchange - with focus on Latin-America. The Company is operator of several production and exploration assets in Colombia. Interoil currently employs approximately 95 people and is headquartered in Oslo.

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
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Presentation of offer

Interoil Main Office:
c/o Advokatfirmaet Schjødt AS
Ruseløkkveien 14
NO-0251 Oslo, Norway

Phone: (+47) 67 51 86 50
Fax: (+47) 67 51 86 60
info@interoil.no

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