Business Irish

Sunday 25 February 2018

Banks didn't spark $750m Tullow rights issue - McDade

Tullow Oil incoming ceo Paul McDade. Photo: George Brooks
Tullow Oil incoming ceo Paul McDade. Photo: George Brooks
Gavin McLoughlin

Gavin McLoughlin

Tullow Oil's plan to raise $750m via a rights issue was not sparked by pressure from lenders, incoming chief executive Paul McDade told analysts.

McDade said the plan would give Tullow financial flexibility.

"It's important to say we didn't have any push from our banks," McDade said, adding that in his view the plan, which is fully underwritten by Barclays and JP Morgan - meaning the banks will buy any unsold shares - "removes any questions about the financial strength at Tullow".

The company intends to use the proceeds to accelerate paying down its debt. McDade said the plan would save around $100m in finance costs.

"It's not about spending money, it's about knowing you've got the financial flexibility as you go out and tender for rig contracts and make commitments. We felt this is the right time."

McDade said the company would continue to explore future asset sales with a view to maximising value for shareholders. He said there were no plans to add assets. Outgoing chief executive Aidan Heavey was also on the call and said he fully supported the rights issue.

The new shares will be issued at 130p each - a discount of around 45pc on the closing price on the last business day prior to Friday's announcement.

Sunday Indo Business

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