Muscat: Topaz Marine has announced that it has successfully priced an offering of $350 million Senior Notes due in 2018 at a fixed coupon of 8.625 per cent per annum and at an issue price of 100 per cent.
The offering is expected to close on November 4, subject to customary closing conditions. Topaz Marine is a subsidiary of Topaz Energy and Marine Limited, the oil and gas Offshore Support Vessel (OSV) fleet operator owned by MSM-listed Renaissance Services.
The gross proceeds from the issue and sale of the Notes will be used to repay certain facilities, fund capital expenditure, increase cash on balance sheet and pay the fees and expenses related to the offering and sale of the Notes.
René Kofod-Olsen, CEO of Topaz Energy and Marine, commented: "We are pleased to have successfully completed our inaugural offering which provides us with a solid platform for growth. We have been encouraged by investor demand and the market's appreciation of our model including key credit strengths such as stable and healthy operating margins, a $1 billion contract backlog and our excellent operational- and safety track-record with large international clients. The proceeds will support our strategy of measured expansion and will allow us to pursue selective vessel purchases adding to our already technologically advanced and modern fleet of Offshore Support Vessels."
The Notes, which were oversubscribed, were rated B3 by Moody's and B- by S&P and are being offered only to qualified institutional buyers in accordance with Rule 144A under the United States Securities Act of 1933, and outside the United States in accordance with Regulation S under the Securities Act. The Notes are expected to be admitted to trading on the Global Exchange Market of the Irish Stock Exchange.
The Notes are guaranteed on a senior unsecured basis by Nico Middle East Limited (NMEL), a wholly owned subsidiary of Topaz and the direct parent of the Issuer, Topaz Marine.
Speaking to the media, Renaissance chairman, Samir Fancy commented: "I believe this is a landmark transaction in the oil and gas services space in Oman, the UAE, and in the Gulf Cooperation Council (GCC) region in general and particularly in relation to structure, pricing, and demand."
Earlier in the year, Renaissance completed a refinancing programme for OMR200.5 million ($521.3 million). Asked how the new funds would complement the re-financing initiative, the Renaissance chairman commented: "The re-financing re-calibrated the company's balance sheet and achieved 13-year funding at attractive low cost. That amazing outcome was testament to the company's financial stability and strong cash flows. This new Topaz bond is primarily focused on capital for growth. The difference from conventional bank funding is that this bond does not require annual principal repayments (non-amortising) and the company has the option to reinvest the relevant free cash for the entire period of the bond. This came at a cost approximately 2 per cent over the blended cost of borrowings.
Given that we have a capital hungry model and buy assets with a 30 year life this addition to our tool box is a potential game changer with the potential of future longer tenure offerings.
This further gives us access to the deepest capital markets of the world where we will now have a track record and easier access to both the debt and equity markets."
Asked about the level of interest and over-subscription, Fancy replied: "We are delighted by the level of investor interest from all the markets including London, the United States and the Middle East. More than $2 billion pledged shows great trust and confidence in our business and in our management team. These are sophisticated markets giving a major thumbs up to a Middle East enterprise with global operations.