Tullow Announces $300M Bond Offer

Tullow Oil plc has announced the launch of an offering of $300 million of convertible bonds, due 2021, which will be used for general corporate purposes and to fund capital investment in the group’s assets in West and East Africa.

The bonds will be issued by Tullow Oil (Jersey) Ltd, a wholly-owned subsidiary of the company incorporated in Jersey but tax resident in the UK, and will be guaranteed by the company and certain subsidiaries of the company. The bonds, which will be convertible into fully paid ordinary shares of the company, are expected to carry a coupon of between 5.875 percent and 6.625 percent per annum payable semi-annually in arrears on January 12 and July 12 in each year, with the first interest payment date being January 12, 2017.

The initial conversion price is expected to be set at a premium of between 30 percent and 35 percent above the volume weighted average price of an ordinary share on the London Stock Exchange between opening and closing of the market on July 6, 2016, converted at the prevailing USD:GBP spot rate.

Unless previously converted or redeemed, or purchased and cancelled, the bonds will be redeemed at par on July 12, 2021. Settlement and delivery of the bonds is expected to take place on or about July 12, 2016.

“The proposed convertible bond issue will further diversify Tullow Oil’s sources of funding and give the company access to a new investor base. As per our most recent trading statement, our focus will continue to be on strengthening the balance sheet and deleveraging the business,” said Ian Springett, chief financial officer of Tullow Oil, in a statement sent to Rigzone.

Following Tullow’s announcement, FirstEnergy described market reaction to the development as “neutral” and stated that the conversion price is well about the oil and gas advisory firm’s ReNAV for Tullow.


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