TORONTO -(Dow Jones)- Strapped for cash, Interoil Corp. (IOC) is negotiating
with Merrill Lynch & Co. (MER) to refinance a $130 million credit facility to
avoid a missing the loan's May 3 repayment due date.
In a regulatory filing, the Canadian incorporated energy company with
operations in Papua New Guinea, said the company's "existing cash balances and
ongoing cash generated from operations will not be sufficient to facilitate
repayment of (its) $130 million secured bridging facility."
Interoil is drilling for oil and gas in Papua New Guinea. It also operates a
string of gas stations there, which the company refers to as its downstream
business, and has midstream operations which are comprised of a refinery and
plans to develop and liquification natural gas plant.
In addition to the loan, Interoil said it doesn't currently have sufficient
cash to further develop its Elk/Antelope natural gas well.
"The circumstances...raise uncertainties as to the ability of the company to
meet its obligations as the come due," Interoil said.
Interoil's drilling activity is key to proving that it has sufficient natural
gas reserves to support development of an LNG facility. To date, the company has
no proven energy reserves as defined by Canadian regulations.
Interoil's warning about its cash position was included in the company's
consolidated financial statements for 2007. For the year, Interoil reported a
loss of $28.9 million or 96 cents a share, versus a loss of $45.8 million or $
1.55 a share in the prior year. Revenue rose to $630.4 million from $518.1
At the end of December, Interoil had cash of $43.9 million and another $22.4
million in restricted cash. It also said it had a short term working capital
facility that is renewable annually.
Interoil said that it "must extend or secure sufficient funding through
renewed borrowings, equity raising and/or asset sales to enable sufficient cash
to be available to meet (its) obligations and further its development plans."
As part of its efforts to refinance the $130 million loan, the company said,
as of March 28, it was "working towards" finalizing a new term sheet with
Merrill Lynch in order to refinance the loan before May 3.
It said that it expects to secure the financing as a result of the avenues it
is exploring, but at the same warned "there is no assurance that these programs
will be successful."
Company Web Site: http://www.interoil.com
-By Ben Dummett, Dow Jones Newswires; 416-306-2024; email@example.com
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