UAE oil giant in talks to obtain loan of up to $5 billion

24 Jul, 2017

Two banking sources said on Monday that company's talks with regional and international banks are focusing on a loan that may total several billion US dollars. A third said it was expected to be in a range of $4 billion to $5 billion.

The loan facility, which would have various maturities of up to five years, is one of a number of fund-raising options being considered by the company, formally called the Abu Dhabi National Oil Co. It is also discussing the possibility of issuing a project bond that could be as large as $3 billion, bankers said, declining to be named because of commercial sensitivities.

An Adnoc spokesman told Reuters: "As announced on July 10, Adnoc is expanding its partnership model and creating new partnership and co-investment opportunities across all areas of its value chain.

"Alongside this new partnership model, Adnoc is also taking a more active approach to managing its portfolio of assets and balance sheet to both unlock value and drive growth.

"Furthermore, as per the normal course of its financial planning, Adnoc is also looking at the most effective capital structure for the efficient management of its business."

Before oil prices crashed in 2014, state energy firms in the Gulf largely financed themselves with money from their governments. But low oil and gas prices mean governments' finances are under pressure, so companies are increasingly turning to the markets.

FIRST DOLLAR

The planned loan would be Adnoc's first large borrowing from banks beyond a deal worth up to $3.3 billion with Japanese banks that it signed last year. The project bond would be Adnoc's first dollar bond.

In April, Riyadh's national oil firm Saudi Aramco raised 11.25 billion riyals ($3.0 billion) with a debut issue of Islamic bonds. Oman Oil is working on a pre-export financing loan of around $1 billion after closing a $2 billion loan package a few weeks ago.

Adnoc's financing strategy is driven by Sultan al Jaber, the company's group chief executive, who took charge last year.

"Adnoc is looking at funding for different projects and talks have just begun - nothing has been finalised," said a regional banker.

The company has not appointed banks yet to lead the planned loan transaction, but a Dubai-based banker said "things will move quickly" and a mandate was likely to be awarded within the next couple of weeks.

Adnoc is also working on an initial public offer of shares in its retail unit, Adnoc Distribution, which could raise up to $2 billion, sources told Reuters last week.

First Abu Dhabi Bank, HSBC, Bank of America Merrill Lynch and Citigroup have been mandated for the IPO, the sources said.

US boutique investment firm Moelis & Co is advising Adnoc on its funding strategy, while Rothschild has been hired as adviser on the flotation of Adnoc's distribution unit.

The energy producer manages 95 percent of proven oil reserves in the United Arab Emirates and 92 percent of the country's gas reserves.

 

Copyright Reuters, 2017

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