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Oil exploration   Papua New Guinea borrowed nearly $1 billion from UBS

Papua New Guinea government sells Oil Search stake

PNG oilThe cash-strapped Papua New Guinea government has sold its stake in the prospecting company Oil Search.

The Australian reports the government ordered the sale of 31.3 million shares amounting to a 2.1 percent holding in the company for $162 million.

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READ MORE ADB: Gas-rich Papua New Guinea facing decline

In 2014, the government borrowed nearly $1 billion from UBS bank to buy a 9.8 percent stake in the firm which holds the rights to PNG's largest undeveloped gas fields.

Reuters reports that after refinancing UBS and JP Morgan held 149 millions shares for the government as security but gradually sold them down to hedge the debt as the share price fell.

Had PNG paid back the loan the banks would have bought back the shares but instead they sold the remaining stake to extinguish the government's debt.

The decision by Peter O'Neill's government to take out the loan led to the sacking of then-finance minister Don Polye, who refused to approve it.




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