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NZOG provides rest of $25m funding to PRC

On Friday 26 November 2010, 8:27

NZ Oil & Gas has on Friday provided the balance of a $NZ25 million ($A19.41 million) short term funding facility to Pike River Coal.

Since September $NZ13 million ($A10.09 million) 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 on Friday.

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 $NZ12 million ($A9.32 million) available. That sum was transferred to Pike River on Friday 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," Mr 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 $US28.9 million ($A29.48 million) in secured convertible bonds. It has agreed to a 90-day standstill period for the bonds, including deferred payment of interest.