Sheik says can't shake the Sheik

[Palm]

The OSH shares that serve as collateral for the bonds PNG issued to buy into PNG LNG are creating quite the stir. PNG says it wants to buy them back at the $A8.55 strike price, but they may have to up the ante. Sheik Mansour, a member of the Abu Dhabi ruling family, owns International Petroleum Investment Co (IPIC), and he may be saying, "Not so fast my friend" to PNG. Sheik may not want to have the shares shook from his shrewd share holdings. Could get interesting

Sheik seen to keep PNG gas interest

Source:

The National, Tuesday November 12th, 2013

 THE Government’s move to buy back a convertible debt involving the PNG LNG project before it becomes an equity for an Abu Dhabi billionaire has sparked the interest of the powerful tycoon, who may be keen to maintain an interest in PNG.

The convertible debt deal was struck during the 2008 financial crisis with Abu Dhabi billionaire Sheik Mansour bin Zayed Al Nahyan and is forecast to trigger a contest for a slice of a US$19 billion (K46.34 billion) natural gas project.

Sheik Mansour, a member of the Abu Dhabi ruling family, owns International Petroleum Investment Co (IPIC), the company, which loaned A$1.6 billion (K3.63 billion) to the PNG Government in 2008 for an equity in the PNG LNG project.

The Government secured this loan by putting up its 14.7% shares in Oil Search Ltd for the cash.

There is a condition in the agreement that the government could buy back the shares before the maturity period, which is March next year.

The March conversion date was sparking speculation that producers including ExxonMobil, the world’s biggest energy company, may also seek the holding.

Oil Search is viewed by many global financial analysts as a strategic 20/20 company, meaning its shares will rise to A$20 (K45.40) per share by 2020.

The PNG headquartered company has become the envy of many, and many believed the IPIC deal was a smart scheme engineered by Oil Search itself for the PNG Government to take up equity in the LNG project, and then retain the option of maintaining its shareholding in Oil Search through the buy back.

The Government, through the IPBC, believed it can buy back the Oil Search shares at A$8.55 (K19.41) per share, the strike price which it was thought the company shares would trade at during the swap.

It is understood that a number of investment banks had made presentations to a government team, outlining financing proposals for the buy back.

The government, led by IPBC and Treasury officials, was yet to decide on which financing option to utilise.

But financial markets monitor Bloomberg said last week that the transaction was now attracting interest from the Sheikh himself, and ExxonMobil, which owned project operator Esso Highlands as well as Total, the French global energy giant.

The Sheik used a similar debt and equity arrangement to take control of Manchester City Football Club in 2010.

[Stavros]

Palm:

The National has rehashed the original Bloomberg so-called Article.

To my opinion, PNG doesn't have to up the ante.

According to an old Japanese proverb: "CONTRACT IS CONTRACT"

This proverb was followed when IOC paid back all of Mitsui's sunk costs on the CSP development with requisite interest. No questions asked.

The key points in play here are:

1) "There is a condition in the agreement that the government could buy back the shares before the maturity period, which is March next year."

2) "It is understood that a number of investment banks had made presentations to a government team, outlining financing proposals for the buy back.
The government, led by IPBC and Treasury officials, was yet to decide on which financing option to utilise."

My view is that Mansour can do as much watching as he wants ... when PNG gets the financing arranged << and they will >> they get the shares back from IPIC.