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Z Energy to raise up to $125M in bond offer to refinance recent maturity

Monday 20th August 2018

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Z Energy will raise as much as $125 million through a new six-year bond offer paying at least 4 percent a year, which it will use to refinance $150 million of debt that matured last week. 

The Wellington-based company is selling $100 million of six-year unsubordinated secured fixed rate bonds and will take up to $25 million in oversubscriptions, it said in a statement. The funds raised will partially refinance $150 million of listed bonds that matured last week. 

"Z will use the net proceeds of the offer for the refinance of some of its existing debt funding, principally in relation to Z’s ZEL020 bonds which matured on 15 August 2018 and for general corporate purposes," it said in the offer term sheet. 

The notes will pay a minimum interest rate of 4 percent per annum, and have an indicative margin of 150-to-160 basis points above the six-year swap rate, which was recently at 2.51 percent. That implies the final rate will be set at 4.01-to-4.11 percent. The actual margin will be set on Aug. 24 after a bookbuild process. 

The offer is expected to close on Aug. 24. It doesn't have a public pool, with bonds reserved for customers of the joint lead managers Deutsche Craigs, Forsyth Barr and Westpac Banking Corp. Firm brokerage is 0.75 percent on firm allocations. 

The transport fuels company has $355 million of remaining retail bonds spread across three notes maturing in 2019, 2021 and 2023. A further $180 million of three-year bank debt expires in May 2019, while three US private placement notes mature in 2026, 2028 and 2030. 

Z shares slipped 0.1 percent to $7.35, having declined 4 percent so far this year. 


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