Artie Somare claims premature victory

[Palm]

Arthur Somare was highly criticized for the borrowing of $1.68 billion from IPIC to secure financing for the equity in the PNG LNG project. On Tuesday OSH hit A$8.61/share to temporarily surpass the required strike price of A$8.55. At that strike (which must be the price in March of 2014) the PNG government can swap its 15% ownership of OSH for the bonds thereby repaying the debt in total without any "bullet" payment for any shortfall. This is a very positive development for PNG as long as pps holds in this territory. A lot can happen between now and March but hopefully for PNG's sake this happens. Rooting fir you Artie!

SOMARE SILENCES CRITICS

on Thursday, 05 September 2013. Posted in PNG Resource News, News

Former State Enterprise Minister says PNG is capable of repaying LNG loan.

In 2008, the government’s decision to negotiate a 3.7 billion kina loan with the International Petroleum Investment Corporation to finance its 19 percent equity in the PNG LNG Project was criticized by many.

Five years on, the then Minister for State Enterprises Arthur Somare has defended the government’s decision.

Former Minister for State Enterprises, Arthur Somare, was all smiles after Oil Search share prices hit a record high of $8.61 on Tuesday.

For Mr Somare, it means the decision he made in 2008 to secure PNG LNG equity finance from the International Petroleum Investment Company, through an exchangeable bond, will pay off handsomely for the benefit of the People of Papua New Guinea.

The State had obtained a $1.68 billion dollar loan from IPIC, in exchange for its 14.6 per cent equity in Oil Search.

The agreed strike price of Oil Search shares was of $8.55 to be converted by March 2014.

With Oil Search shares performing within that range, Mr Somare now believes the State can repay the IPIC loan comfortable through the transfer of shares.

“To my great relief, as was predicted four years ago, that we would hit a strike rate of $8.55…on Tuesday the Oil Search shares hit the high of $8.61 at around 2.30 pm which gives me great relief. So today, the implication behind that is very simple, there will not be any bullet payment required from the IPIC transaction,” said Somare.

A relieved Somare told EMTV’s Resource PNG program that he has proven himself against his critics.

He also added that what it means now for the average Papua New Guinean is that extra monies won’t be forked out of the government budget to repay the IPIC loan.

He says doomsayers who had doubted that Oil Search’s share price would rise from 9 kina in 2008 to over 19 kina by 2014 should now realize their error.

[jft310]

Arthur Somare was highly criticized for the borrowing of $1.68 billion from IPIC to secure financing for the equity in the PNG LNG project. On Tuesday OSH hit A$8.61/share to temporarily surpass the required strike price of A$8.55. At that strike (which must be the price in March of 2014) the PNG government can swap its 15% ownership of OSH for the bonds thereby repaying the debt in total without any "bullet" payment for any shortfall. This is a very positive development for PNG as long as pps holds in this territory. A lot can happen between now and March but hopefully for PNG's sake this happens. Rooting fir you Artie!

SOMARE SILENCES CRITICS

on Thursday, 05 September 2013. Posted in PNG Resource News, News

Former State Enterprise Minister says PNG is capable of repaying LNG loan.

In 2008, the government’s decision to negotiate a 3.7 billion kina loan with the International Petroleum Investment Corporation to finance its 19 percent equity in the PNG LNG Project was criticized by many.

Five years on, the then Minister for State Enterprises Arthur Somare has defended the government’s decision.

Former Minister for State Enterprises, Arthur Somare, was all smiles after Oil Search share prices hit a record high of $8.61 on Tuesday.

For Mr Somare, it means the decision he made in 2008 to secure PNG LNG equity finance from the International Petroleum Investment Company, through an exchangeable bond, will pay off handsomely for the benefit of the People of Papua New Guinea.

The State had obtained a $1.68 billion dollar loan from IPIC, in exchange for its 14.6 per cent equity in Oil Search.

The agreed strike price of Oil Search shares was of $8.55 to be converted by March 2014.

With Oil Search shares performing within that range, Mr Somare now believes the State can repay the IPIC loan comfortable through the transfer of shares.

“To my great relief, as was predicted four years ago, that we would hit a strike rate of $8.55…on Tuesday the Oil Search shares hit the high of $8.61 at around 2.30 pm which gives me great relief. So today, the implication behind that is very simple, there will not be any bullet payment required from the IPIC transaction,” said Somare.

A relieved Somare told EMTV’s Resource PNG program that he has proven himself against his critics.

He also added that what it means now for the average Papua New Guinean is that extra monies won’t be forked out of the government budget to repay the IPIC loan.

He says doomsayers who had doubted that Oil Search’s share price would rise from 9 kina in 2008 to over 19 kina by 2014 should now realize their error.

This brings to mind what an IBer told me about when to sell an LNG project and that was right before LNG production starts. The expectations were highest then. Think of IOC and when the best time would be to sell off part or all of the company would be right before the LNG plant opens. The LNG plant may have start up issues and other things happen but the highest price is right before the plant opens. With IOC it's not hard to see more than one LNG plant and with more than one train. So a sell down might make good common sense with so many assets. Just looking ahead and explaining we have held IOC for such a long time.