Tullow Oil plc has announced the commencement of processes for the issuance of a bond offering of $1.8 billion in secured notes and has received $600 million of commitments from lenders in a revolving credit facility agreement.
The new bond offering will mature in 2026, while the revolving credit facility matures in December 2024. That said, proceeds from the bond sale will allow for the settlement of payments due this year and in 2022, Tullow Oil plc says.
The announcement of the issuance of the bond offering came yesterday, April 29, 2021.
According to the oil major, the notes and revolving credit facility will help secure the debt obligations of the company.
Use of Proceeds from the Sale
Specifically, Tullow intends using the proceeds in addition to available cash to extend the maturity of debt obligations.
In that vein, the company will use the proceeds from the transaction to repay all amounts outstanding, and at the same time cancel all commitments made as a result of its existing Reserve Based Lending Facility.
The proceeds from the sale will help redeem the full obligation of the Company’s $650 million due 2022. The debt obligation is at a redemption price of 100% of their principal amount. It is also to cover all accrued and unpaid interest and additional amounts, if any, to the date of maturity.
Convertible bonds to the tune of $300 million at maturity, will also be repaid in full with the same proceeds.
Additionally, all fees and expenses incurred during the transaction will be settled from the amount accrued from the bond sale.
However, it has hinted that the proceeds will not cover the payment of $800 million in debt outstanding due 2025.
These have become necessary due to the company’s compounding debt amortization and fast-approaching maturities of already accumulated debts. Meanwhile, the Coronavirus pandemic also landed a big scar in the operations of the company, thus necessitating this action.
Bond issuance to be influenced by certain factors
Tullow revealed that as at the time of the bond issuance, the release was subject to uncertainties and market conditions.
“Many important factors could cause the Company’s results to differ materially from those expressed in these forward-looking statements.
“These factors include, but not limited to, general market conditions, national or global events affecting the capital markets, the coronavirus disease (COVID-19) outbreak, unforeseen developments in the Company’s business or industry or changes in law or regulations governing the Company’s ability to complete the Transactions.”
In November 2017, Tullow Oil plc issued a $2.5 billion credit facility. The credit facility involved $2.4 billion being a commercial bank facility and an International Finance Corporation (IFC) facility of $100 million.
As at the time, the company indicated that the credit facility would reduce repayment obligations of its Revolving Corporate Credit Facility from $800 million to $600 million.
This bond issuance came at a time when the border disputes between Ghana and Cote d’Ivoire had been resolved.