Interoil's Bondholders Face Crucial Vote on PIK Bond Proposal

In the dynamic world of corporate finance, bondholders often find themselves at the mercy of issuers' decisions. However, when those decisions significantly impact bondholders' rights and obligations, they are given the opportunity to voice their opinion through a voting process. This is the case with Interoil Exploration and Production ASA (the "Company"), which has requested Nordic Trustee AS to summon for a bondholders' written resolution to amend the terms of its senior secured callable bonds.

The Company wishes to settle the full January Interest Payment in kind by issuing and delivering additional Bonds (the "January PIK Bonds") with terms and conditions substantially equal to those of the outstanding Bonds and the same interest rate as the outstanding Bonds at a rate of eight point fifty per cent (8.50%). This proposal has sparked a crucial voting process among bondholders, who must decide whether to support or reject the proposed amendments.



The proposed amendments to the bond terms regarding the settlement of the January Interest Payment will impact the rights and obligations of bondholders in several ways. Firstly, the settlement in kind means that instead of receiving cash, bondholders will receive new bonds with terms and conditions substantially equal to those of the outstanding Bonds. This change may impact bondholders who were expecting a cash payment and may affect their liquidity needs. Secondly, the new Bonds will have the same interest rate as the outstanding Bonds, which is 8.50%. This rate may be higher or lower than what bondholders were expecting or desired, affecting their potential returns on investment.

Moreover, the proposed resolution will be passed if a simple majority of the voting bonds vote in favor of the proposed resolution prior to the expiry of the voting period. The voting period shall expire ten (10) business days after the date of the Summons, i.e., at 5 pm Oslo time on 31 January 2025. Bondholders have the right to vote on the proposed amendments, and their votes will determine whether the changes are implemented. This gives bondholders a say in the decision-making process regarding the changes to their bond terms.

The proposed amendments may also have an impact on the market price of the bonds. If bondholders perceive the changes as favorable, the bond prices may increase. Conversely, if bondholders view the changes as unfavorable, the bond prices may decrease. This could affect the value of bondholders' investments. Additionally, changes in bond terms can potentially affect the credit ratings of the bonds. If the changes are seen as positive, the credit ratings may improve, which could lead to better market access and lower borrowing costs for the Company. However, if the changes are seen as negative, the credit ratings may deteriorate, which could have the opposite effect.

In conclusion, the proposed amendments to the bond terms will impact the rights and obligations of bondholders in various ways, including changes in the settlement method, interest rate, voting rights, potential impact on bond prices, and potential impact on credit ratings. Bondholders should carefully consider these factors when deciding whether to vote in favor of or against the proposed amendments. The voting process is designed to ensure that the bondholders have a say in the proposed changes to the bond terms and that the resolution is passed only if a sufficient majority of bondholders agree to the proposed amendments.