NZOG provides Pike River funding
New Zealand Oil & Gas (NZX: NZOG) today transferred the balance of a short-term funding facility to Pike River Coal (NZX: PRC), worth about $12m.
New Zealand Oil & Gas (NZX: NZOG) today transferred the balance of a short-term funding facility to Pike River Coal (NZX: PRC), worth about $12m.
The total $25m facility was agreed in September 2010 to support Pike River Coal as it commissioned hydro-mining equipment and prepared for regular coal shipments.
Since then, Pike River has drawn $13m of the facility to meet operating costs.
NZOG said that following the first explosion at Pike River's coal mine, where 29 men died, the NZOG board was advised that the outstanding loan was repayable and that it had no legal obligation to advance any further money.
The board resolved that it would not seek immediate repayment and that it would honour the spirit of the agreement and make the remaining $12m available.
That sum has this morning been transferred to Pike R. NZOG has also agreed to extend the repayment date from 15 December 2010 to 28 February 2011, and to defer interest payments that would otherwise be due until that time.
The Pike River board is expected to meet today to discuss the company’s future.
NZOG chief executive David Salisbury said that NZOG had always managed its investment in Pike River with the best interests of NZOG shareholders in mind.
“This decision was taken because there are sound business reasons for honouring our earlier funding commitment. It is also the right moral decision. During this difficult time, the mine company's workforce needs to know it can still be paid."
NZOG also holds US$28.9m in secured convertible bonds, and has agreed to a 90-day standstill period for the bonds, including deferred payment of interest.
NZOG has made a $500,000 donation to the Pike River miners' relief fund.
Nina Fowler
Fri, 26 Nov 2010
Fri, 26 Nov 2010
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NZOG provides Pike River funding
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