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Ampol successfully prices $500 million subordinated notes

Ampol

Petroleum company Ampol has announced that it has successfully priced an offering of A$500 million subordinated notes due 2081 (Subordinated Notes) to wholesale investors in the domestic fixed income market.

Settlement is expected to occur on or around 2 December 2021.

Ampol believes that these subordinated notes are an effective long-term source of capital and will form part of Ampol’s ongoing capital management strategy.

Net proceeds of the issue will be used for general corporate purposes and in line with Ampol’s Capital Allocation Framework, which may include partly funding the acquisition of Z Energy announced on 11 October 2021, subject to Z Energy shareholder and New Zealand regulatory approvals.

Group chief financial officer Greg Barnes said the transaction received strong support from investors, resulting in another successful issue following its previous subordinated notes issue in 2020.

“This funding serves to further diversify our capital sources and support our balance sheet, including for the proposed acquisition of Z Energy,” he said.

The key terms of the subordinated notes are a 60-year maturity and interest payable quarterly at a floating rate of 3-month bank bill swap rate (BBSW) plus a margin of 3.40 per cent, subject to certain deferral rights.

Key terms also include subordinated to Ampol’s senior debt and pari passu with outstanding subordinated notes and redeemable at par with cash by Ampol in March 2027 and on subsequent interest payment dates.

In addition, if the company decides not to redeem in March 2027, holders have a one-off option to convert their subordinated notes into Ampol ordinary shares – the number of shares will be determined based on the then prevailing VWAP1 less a one per cent discount.

The subordinated notes are expected to receive 50 per cent equity credit from Moody’s Investors Service, providing support to Ampol’s credit rating.

Last week, Ampol tapped a four-bank syndicate to pitch the subordinated notes deal to fund managers.

The petrol retailer hired Commonwealth Bank, Mitsubishi UFJ Financial Group, NAB and RBC Capital Markets as joint lead managers for the raise, while it picked Barrenjoey as the sole structuring adviser.

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