Tue 12/29/2020 12:08 PM
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Investors holding Tullow Oil’s $650 million 6.25% unsecured 2022 bond have hired Rothschild as financial advisor for its upcoming debt talks, sources close told Reorg. Akin Gump is providing legal advice to the 2022 bondholders in the context of what the Africa-focused upstream energy company is describing as a refinancing.

A group of investors in Tullow Oil’s $300 million 6.625% 2021 convertible bond has organized and retained Weil Gotshal as its legal advisor. Financial advisors pitched the 2021 noteholders before the Christmas holiday and a decision is yet to be made on that appointment.

Tullow’s 2022 notes are quoted at 77/81, while the $300 million 6.625% 2021 convertible notes are at 85/90, according to a broker.

Tullow Oil is due to discuss refinancing options with its bondholders after completing a redetermination of its $2 billion RBL facility. Lenders in the senior facility may request that the company use a material portion of its Uganda asset sale proceeds to reduce the size of the facility. The degree of RBL reduction will form the basis of the talks with the junior bondholders. As of Nov. 10, Tullow had $1 billion in liquidity headroom.

Tullow Oil’s RBL lenders are working with Perella Weinberg and Clifford Chance. The company is advised by Latham & Watkins and PJT.

The company’s capital structure as of June 30 is shown below. On Nov. 10, the group received $500 million cash from its Ugandan asset sale.
 
Tullow Oil Plc
 
06/30/2020
 
EBITDA Multiple
(USD in Millions)
Amount
Maturity
Rate
Book
 
Reserves Based Lending Facilities due 2024 1
1,505.0
Nov-2024
 
 
Finance Leases 2
1,326.9
 
 
 
Total Secured Debt
2,831.9
 
2.8x
$650M Senior Unsecured Notes due 2022
650.0
Apr-2022
6.250%
 
$800M Senior Unsecured Notes due 2025
800.0
Mar-2025
7.000%
 
$300M Convertible Notes due 2021
300.0
Jul-2021
6.625%
 
Total Unsecured Bond Debt
1,750.0
 
4.5x
Total Debt
4,581.9
 
4.5x
Less: Cash and Equivalents
(236.3)
 
Plus: Restricted Cash
99.0
 
Net Debt
4,444.6
 
4.4x
Plus: Market Capitalization
355.2
 
Enterprise Value
4,799.8
 
4.7x
Operating Metrics
LTM Reorg EBITDA
1,012.9
 
 
Liquidity
Other Liquidity
409.0
 
Plus: Cash and Equivalents
236.3
 
Less: Restricted Cash
(99.0)
 
Total Liquidity
546.3
 
Credit Metrics
Gross Leverage
4.5x
 
Net Leverage
4.4x
 

Notes:
LTM Reorg EBITDA is the company's reported EBITDAX figure. Restricted cash consists of $32 million that the company holds as operator in joint venture bank accounts and $67 million held in restricted bank accounts
1. The RBL facilities amortize. The final maturity is Nov. 2024
2. Leases mostly relate to the TEN FPSO and Espoir FPSO ($1.29 billion at year-end 2019). Due to limited disclosure in the group's H1 2020 report, we assume that all leases are finance leases

--Magnus Scherman, Jack Laurenson
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