Caltex announces $300m debt offer
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Nicholas Grove is a Morningstar journalist.
Caltex Australia (CTX) on Tuesday said it is looking to raise $300 million through a debt offer to retail and institutional investors, with the proceeds going towards general corporate purposes and the refinancing of existing debt.
"The notes represent Caltex's first retail targeted capital markets transaction since listing on the ASX (Australian Securities Exchange) and provide investors with a new investment opportunity in Caltex," the company's chief financial officer Simon Hepworth said.
"The offer will provide a number of benefits to Caltex, including increased funding flexibility and diversification as the company seeks to implement a number of strategic initiatives.
"These include continued investment in Caltex's supply chain and marketing operations to maintain growth momentum. The most significant investment is the closure and conversion of the Kurnell Refinery in Sydney to a major import terminal."
Caltex, which is 50 per cent-owned by US oil giant Chevron, last week made its widely expected decision to close its refinery in the Sydney suburb of Kurnell in late 2014 and convert it into an import terminal.
In a recent note, Morningstar head of equities research Peter Warnes said Kurnell's geographical location is ideal for facilitating seaborne cargoes and efficient distribution.
"Kurnell has been responsible for the overwhelming majority of refining losses in recent years. Availability and reliability has not been consistent, hurting production and utilisation rates. The correct decision has been made," he said.
Caltex Subordinated Notes will be dated, direct, unsecured, subordinated and cumulative in nature, and will have a face value and issue price of $100 per note, the company said.
They have a first call date of 15 September 2017 and a final maturity date of 15 September 2037, Caltex said.
The notes entitle holders to receive floating-rate, cumulative interest payments quarterly in arrears, subject to deferral, with the payments to be calculated on a quarterly basis as the sum of the three-month bank bill rate plus the margin.
The margin will be determined following the bookbuild and is expected to be in the range of 4.50 per cent to 4.75 per cent per annum. This equates to an initial yield of approximately 8.00 per cent to 8.25 per cent per annum.
If the notes are not redeemed by 15 September 2017, the margin will increase by 0.25 per cent per annum, Caltex said.
The notes will be quoted on the ASX under the code CTXHA and will not be convertible into ordinary shares or any other securities, it said.