Thai state oil company PTT Exploration and Production has finalized arrangements for the $3.1 billion share offer that will enable it to cover the cost of its acquisition of Cove Energy.
There had been concerns that PTTEP's fundraising would be delayed because of shareholder objections to the dilution of their equity in the firm. These fears have now been allayed since PTTEP is only making the share issue available to existing shareholders in the firm.
Around $2 billion of the new funds will be used to pay for the acquisition of Cove while the remainder of the funds will be used to pay down debt as well as fund further exploration, development and production activities, said the firm.
In the summer, PTTEP won a lengthy takeover battle with Royal Dutch Shell over the ownership of Cove Energy, which has a significant stake in Mozambique's Rovuma Basin – which contains significant amounts of natural gas and where PTTEP plans to develop an LNG business.
"The management team has actively engaged with shareholders to discuss the company’s business strategies and the rationale behind the capital increase. We are confident that our shareholders share in the Company’s vision," said PTTEP CEO Tevin Vongvanich in a statement.
The new structure of the fundraising is still subject to approval at a PTTEP shareholders meeting on Oct. 29.
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