Tullow Oil plc (Tullow) is pleased to announce that it has entered into a $400 million five-year notes facility agreement with Glencore Energy UK Limited (Glencore).
The facility will be available to draw for 18 months and proceeds will be used for liability management of Tullow’s senior notes maturing in March 2025. The interest on the facility will be Term Secured Overnight Financing Rate (SOFR) plus 10% on drawn amounts. Tullow is also pleased to announce that it has entered into oil marketing and offtake contracts with Glencore for Tullow’s crude oil entitlements from the Jubilee and TEN fields in Ghana and the Rabi Light entitlements in Gabon which run concurrently with the notes facility agreement.
Rahul Dhir, Chief Executive Officer, Tullow, commented today: “Glencore’s $400 million facility commitment is a strong endorsement of our business plan and strategy. Today’s announcement demonstrates our ability to access long term capital from a variety of sources and this facility is a material step in our refinancing strategy, following the successful and equity accretive tender offer in June. The proceeds from this facility, together with cash on balance sheet and $800 million of free cash flow expected to be generated during 2023 to 2025, will allow us to fully address all outstanding 2025 Notes and positions us for a successful refinancing of the 2026 Notes.”
Commenting on the transaction, Alex Sanna, CEO of the Oil & Gas Division of Glencore, said: “We are pleased to complete this landmark $400 million notes facility for Tullow, along with the term oil marketing and offtake contracts from Tullow’s production in Ghana and Gabon. This facility is a strong endorsement of Tullow’s business plan and strategy, and demonstrates Glencore’s capability in structuring finance solutions across the oil and gas sector.”
The notes facility is guaranteed on a pari passu basis by the same guarantors as Tullow’s senior notes maturing in March 2025 with the notes facility guarantees being subordinated to the guarantees of Tullow’s senior secured notes maturing in May 2026 (“2026 Notes”). In addition, the notes facility is secured by the same collateral as the 2026 Notes but ranks contractually behind the 2026 Notes with respect to the right to receive proceeds from any enforcement of collateral.
Source: (LSE: TLW)