Adnoc expected to sign this week US$6b loan with 13 banks, say sources

US dollar notes are seen in this November 7, 2016 picture illustration. — Reuters pic notes are seen in this November 7, 2016 picture illustration. — Reuters picDUBAI, Nov 5 — Abu Dhabi National Oil Co (Adnoc), the United Arab Emirates oil giant, is expected to sign by the end of this week a US$6 billion (RM25.42 billion) which has received commitments from a group of 13 banks, sources close to the situation said today.

Adnoc, which manages almost all of the proven oil reserves in the UAE, is raising the financing as part of an overhaul of its capital structure which involves, among other things, additional debt raising exercises and the initial public offering of minority stakes in some of its units.

The club loan has been largely oversubscribed, having attracted commitments of US$750 million each from a group of 13 banks. Commitments will be scaled down to reach the targeted size of US$6 billion size, said the sources.

The group of banks comprises Bank of Merrill Lynch, Bank of Tokyo-Mitsubishi UFJ, BNP Paribas, Citi, First Abu Dhabi Bank, Goldman Sachs, HSBC, JP Morgan, Mizuho, Societe Generale, Standard Chartered, Sumitomo Mitsui Corporation, and UniCredit, said one source close to the matter.

A spokesman for Adnoc, when asked about the loan, said Adnoc is “taking a more active approach to optimising its capital structure to unlock value, free-up capital, enhance returns and drive smart growth. Adnoc is therefore considering various options with regards to its financing strategy.”

“The phased and prudent use of bank and other forms of financing represents an attractive and viable funding option for a more efficient and optimal Adnoc capital structure, whilst also allowing access to new and more diverse pools of liquidity.”

Adnoc started discussions with banks about the loan and other financing facilities earlier this year, in a sign that Middle East energy companies are rethinking their expansion strategies in an era of lower oil prices.

A company controlled by Adnoc, the Abu Dhabi Crude Oil Pipeline, raised a debut of around US$3 billion last month, attracting orders of over US$11 billion while the deal was marketed.

Adnoc is also preparing an initial public offer of shares in its fuel retail business which could raise up to US$2 billion, sources told Reuters. It could list more than 10 per cent of its fuel retail business by early 2018.

The US$6 billion loan that Adnoc is expected to sign this week includes three-year and five-year tranches. Sources told Reuters last month that the facility offers an interest rate in the region of 50 basis points over London Interbank Offered Rates for the five-year tranche and 35 bps over Libor for the three-year tranche. — Reuters

Source: The Malay Mail Online

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