Govt wanted 10pc shares, inquiry told

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THE Government wanted to retain at least 10 per cent shares in Oil Search Ltd (OSL) in 2014, according to managing director Peter Botten.
He yesterday told the Commission of Inquiry into the Union Bank of Switzerland (UBS) K3 billion loan via video conference that the State had requested the company’s assistance to maximise the price via hedging arrangement for its placement, on the basis that the Government obtained Cabinet approval.
“The State wished to retain at least a 10 per cent shareholding in OSL and (then Prime Minister Peter) O’Neill asked if OSL would issue shares to the state in a placement as part of OSL capital raising to fund the proposed acquisition of an interest in PRL15,” he said.
“I told the prime minister that the amount required was around AU$1.2 billion.
“I recall that there was discussion about how the potential share placement would be priced.
“I told him that the final pricing would be referenced to the market price at the time of the placement.
“And he mentioned a price of AU$8.2 per share.
“I also told him that OSL needed to be satisfied that the proposal did not disadvantage existing shareholders and that there would need to be a high degree of certainty around the availability and timing of the state’s funding for the share placement and its alignment with the timing of OSL payment obligations for the proposed PRL15 acquisition.”
He told O’Neill that the proposal could be considered by OSL but would need a formal detailed proposal from the State, and that it would be subject to review and approval by the OSL board.
“O’Neill told me that he would leave it to the Treasury Department to take the proposal forward.”
Botten will give more evidence on July 22.