Office of the State Solicitor
Department of Justice and Attorney General
P. 0. BOX 591, WAJGANI
National Capital District
PAPUA NEW GUINEA
5th March 2014
The Acting Secretary
Department of Treasury
PO Box 542
WAIGANI
National Capital District
Dear Acting Secretary
FINANCIAL ACCOMMODATION FOR THE INDEPENDENT STATE OF PAPUA NEW GUINEA [The State]
I refer to your letter dated sth March 2014 on the above.
Your letter makes reference to documents relating to the proposed transaction (transaction
documents) whereby the State will enter into financial arrangements to fund the acquisition by the
State of 149,390,244 shares in Oil Search limited. These documents were delivered to my office
this morning by way of personal service by Pacific legal Group lawyers upon your instructions. Your
letter referred to above and delivered later during the day requests my urgent consideration of
these documents and issuance of the legal clearance for National Executive Council's (NEC)
consideration.
I noted from the documents that Norton ose Fulbright and Pacific legal Group lawyers are the
State's lawyers engaged and instructed through your office in relation to the above subject. I also
noted that the following transaction documents listed below were negotiated and finalised
between the State's lawyers and respective parties. These documents are;
lack of explanatory notes, I have formed the view that the terms of these agreements are ·a-·
reflection of the State's negotiated position based on your instructions taking into account the ·
State's intentions and as such are acceptable to State.
There are also other documents forming part of the transaction documents and listed below as;
the respective individuals or company boards. Please facilitate such signatures/or board m-eetl-ngs.
I have read the NEC Decision and noted the background ·information particularly the State's
intention to acquire a 10.01% interest in Oil Search.
I have also noted the recommendations and make the following comments;
1. The recommendations should include clearly the fact that the State and NPCP will direct all
PNG LNG equity cash flows to be paid to UBS to be applied to prepayment of the bridge
loan. I am aware that the Organic Law on the Sovereign Wealth Fund provides that all
revenue from the PNG LNG Project will flow into the Sovereign Wealth Fund. This is stated
in paragraph (c) ii on Page 5 of the NEC submission but not included in the
recommendations. This in my view is a Major decision to be taken by the State and NEC
must approve it though it is acknowledged that Treasury department is the State's lead
agency in this regard and may take a decision.
2. Some or if not most of the recommendations to NEC for approvals require
approvals/authorisations specifically from the State's relevant agencies acting
independently pursuant to their respective laws but of course taking into consideration the
Government/NEC Decision. I therefore advise that the relevant approvals be sought from
the State's relevant agencies after NEC consideration and approval of the financing
transaction.
3. I must also advise that section 209 of the PNG Constitution also requires that Parliament's
approval be obtained for these Bridge and Collar loans which totals up to A$ 1.225 Billion
through the budgetary process. I am sure you are aware of this constitutional
requirements and further advise that you take appropriate steps to facilitate this process.
4. Note that I make no comments in relation to the amounts and percentage of fees in relation
to the transaction as these are within your expertise to do so including the debt to equity ratio under the Loans (Overseas Borr-owings) No. 2 Act and the requirements under the Papua New Guinea Fiscal Responsibilit>; Act .
You may proceed to NEC with the documents to be considered taking into account my foregoing
advice.
Please note that after the NEC approval of the Transaction documents, I will then prepare an advice
to the Head of State advising him to execute the transaction documents. As such, I request that you
provide to me the NEC Decision as soon as the decision is signed by the Chairman {Prime Minister).
Yours faithfully,
DANIEL ROLPAGAREA
State Solicitor
Department of Justice and Attorney General
P. 0. BOX 591, WAJGANI
National Capital District
PAPUA NEW GUINEA
5th March 2014
The Acting Secretary
Department of Treasury
PO Box 542
WAIGANI
National Capital District
Dear Acting Secretary
FINANCIAL ACCOMMODATION FOR THE INDEPENDENT STATE OF PAPUA NEW GUINEA [The State]
I refer to your letter dated sth March 2014 on the above.
Your letter makes reference to documents relating to the proposed transaction (transaction
documents) whereby the State will enter into financial arrangements to fund the acquisition by the
State of 149,390,244 shares in Oil Search limited. These documents were delivered to my office
this morning by way of personal service by Pacific legal Group lawyers upon your instructions. Your
letter referred to above and delivered later during the day requests my urgent consideration of
these documents and issuance of the legal clearance for National Executive Council's (NEC)
consideration.
I noted from the documents that Norton ose Fulbright and Pacific legal Group lawyers are the
State's lawyers engaged and instructed through your office in relation to the above subject. I also
noted that the following transaction documents listed below were negotiated and finalised
between the State's lawyers and respective parties. These documents are;
1. Specific Security Deed between the State and UBS Nominees Pty ltd ABN 32 001450 522.
2. Bridge Facility Agreement between the State and UBS AG, Australia Brand1 and UBS Nominees Pty Ltd.
3. Participant Sponsorship Agreement between the State and UBS Nominees Pty Ltd and UBS Securities Australia limited.
4. Payment Direction Deed between the State and the National Petroleum Company of PNG (Kroton) limited, Papua New Guinea liquified Natural Gas Global Company LDC and UBS AG, Australia Branch.
5. Security Trust Deed between the State and UBS Nominees Pty Ltd.
6. Nominee Deed between the State and UBS AG, Australia Branch, UBS Nominees Pty Ltd and UBS Securities Australia Limited.
7. Specific Security Deed (CHESSecurities-Collar) between the State and UBS AG, Australia Branch ABN 47 088 129 613.
8. Subscription Agreement between the State and Oil Search LimitedI have gone through the above listed documents within the permitted time today and despite the
lack of explanatory notes, I have formed the view that the terms of these agreements are ·a-·
reflection of the State's negotiated position based on your instructions taking into account the ·
State's intentions and as such are acceptable to State.
There are also other documents forming part of the transaction documents and listed below as;
1. Advice to Governor GeneralI noted that these documents listed immediately above are yet to be signed and/or approved by
2. Verification Certificate from the State to UBS AG, Australia Branch
3. Minutes of a meeting of the Board of Directors of IPBC
4. Resolution In Lieu of Meeting of shareholders pursuant to Sections 103, 89 and 110 of the
Companies Act 1997
5. Minutes of a meeting of the Board of directors of National Petroleum Company of PNG
(Kroton) Limited held at Port Moresby with no specific date . --· _ j
6. Power of Attorney from the National Petroleum company of PNG {Kroton) Limited (the
Grantor) and
7. Letter from Norton Rose Fulbright to the Independent State of PNG, c.are of the Acting
Secretary of Treasury, Mr Dairi Vele, March 2014.
the respective individuals or company boards. Please facilitate such signatures/or board m-eetl-ngs.
I have read the NEC Decision and noted the background ·information particularly the State's
intention to acquire a 10.01% interest in Oil Search.
I have also noted the recommendations and make the following comments;
1. The recommendations should include clearly the fact that the State and NPCP will direct all
PNG LNG equity cash flows to be paid to UBS to be applied to prepayment of the bridge
loan. I am aware that the Organic Law on the Sovereign Wealth Fund provides that all
revenue from the PNG LNG Project will flow into the Sovereign Wealth Fund. This is stated
in paragraph (c) ii on Page 5 of the NEC submission but not included in the
recommendations. This in my view is a Major decision to be taken by the State and NEC
must approve it though it is acknowledged that Treasury department is the State's lead
agency in this regard and may take a decision.
2. Some or if not most of the recommendations to NEC for approvals require
approvals/authorisations specifically from the State's relevant agencies acting
independently pursuant to their respective laws but of course taking into consideration the
Government/NEC Decision. I therefore advise that the relevant approvals be sought from
the State's relevant agencies after NEC consideration and approval of the financing
transaction.
3. I must also advise that section 209 of the PNG Constitution also requires that Parliament's
approval be obtained for these Bridge and Collar loans which totals up to A$ 1.225 Billion
through the budgetary process. I am sure you are aware of this constitutional
requirements and further advise that you take appropriate steps to facilitate this process.
4. Note that I make no comments in relation to the amounts and percentage of fees in relation
to the transaction as these are within your expertise to do so including the debt to equity ratio under the Loans (Overseas Borr-owings) No. 2 Act and the requirements under the Papua New Guinea Fiscal Responsibilit>; Act .
You may proceed to NEC with the documents to be considered taking into account my foregoing
advice.
Please note that after the NEC approval of the Transaction documents, I will then prepare an advice
to the Head of State advising him to execute the transaction documents. As such, I request that you
provide to me the NEC Decision as soon as the decision is signed by the Chairman {Prime Minister).
Yours faithfully,
DANIEL ROLPAGAREA
State Solicitor