NZOG provides rest of $25m funding to Pike River

Photo / NZPA

NZ Oil & Gas has today provided the balance of a $25 million short term funding facility to Pike River Coal.

Since September $13m of the facility had been drawn by Pike River to meet operating costs at its West Coast mine.

Following the first explosion last Friday at the Pike River mine, where 29 men died, NZOG said it was advised that the outstanding loan was repayable and that it had no legal obligation to advance any further money, NZOG said today.

The NZOG 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 was transferred to Pike River this morning.

NZOG, which has a 29 per cent stake in Pike River, said it had also agreed to extend the repayment date from December 15 to February 28 and to defer interest payments that would otherwise be due until that time.

NZOG chief executive David Salisbury said 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," Salisbury said.

"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. It has agreed to a 90-day standstill period for the bonds, including deferred payment of interest.

- NZPA