(Bloomberg) — The Peruvian government announced an aid package for ailing state-owned company Petroleos del Peru SA on Saturday, putting the state on the hook for repaying international bondholders, while forgiving some loans and increasing its credit line.
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Peru’s finance ministry will now be in charge of paying any installments due in the second half of the year with bondholders and the Spanish Export Credit Agency (Cesce), the decree said.
The ministry will also take over $800 million in loans that Petroperu assumed with the similarly state-owned Banco de la Nacion. That loan will be converted into Petroperu equity. The company will also be allowed an extended credit line with the same bank worth $1 billion.
The decree, published in Peru’s official gazette, caps months of intrigue as Petroperu’s board increasingly called on the government to rescue the company from what it described as an imminent insolvency. The board tendered its resignation last week, blaming the government for not making up its mind.
This is the second rescue package this year for Petroperu, which has been dragging down the country’s finances.
Petroperu has a high level of debt due to the construction of its new Talara Refinery, which was delayed by several years and ended up costing much more than initially budgeted.
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