Geo Energy seeks refinancing of 2018 notes

By Romel S. Gurky

SGX-listed Geo Energy Resources Limited, which operates coal mines in Indonesia, said it plans early redemption of notes due January 18, 2018 amid the company?s strengthening balance sheet in a bid to help reduce interest cost.

Geo Energy said in a statement on Monday that due to the planned refinancing of the S$100 million 7 percent notes, which was issued under the S$300 million Multicurrency Medium Term Note Program, prior to its due date, the company is seeking approval from holders of the notes by way of an extraordinary resolution to, among other things, (i) waive any non-compliance with the negative pledge and certain financial covenants set out in the terms and conditions of the notes and (ii) include a call option allowing Geo Energy to redeem the notes at any time prior to the maturity date of the notes. The waivers are granted provided that the notes are redeemed in full within 15 business days of the group incurring borrowings to, among others, refinance the notes.

The company said a meeting of the noteholders will be held on June 14 2017, at 10.00 a.m. (Singapore time) to vote on this extraordinary resolution.

Commenting on the Consent Solicitation, Tung Kum Hon, Chief Executive Officer of Geo Energy said, ?Due to the turnaround in Geo Energy?s profitability, our balance sheet has materially strengthened even as we explored options to optimize our capital structure. We are pleased to set in motion our plan to refinance the notes before they are due in January 2018, and an early return of capital to noteholders.?

He said the notes currently trade at a discount to par, and the company is offering noteholders the opportunity to redeem the principal early and in full, together with interest accrued to (but excluding) the date for redemption and an one-time fee of 0.50 per cent in principal amount of the notes for noteholders who submit a valid voting Instructions on or prior to the consent fee deadline, 5.00 p.m. on June 5, 2017 to the Principal Paying Agent, in favor of the extraordinary resolution at the meeting.

?Going forward, the early refinancing and redemption of the notes will allow us to lower our costs,? he said.

?We are also making steady progress towards completing our acquisition of PT Tanah Bumbu Resources, a mining concession strategically located next to our PT Sungei Danau Jaya coal mine. Once completed by mid- 2017, we would have expanded our coal reserves to over 90 million tons and marked a significant milestone in the group?s journey to become one of the largest coal producers in Indonesia.?

Editing by Reiner Simanjuntak