Independent Oil and Gas plc ("IOG"), the development and production company focused on becoming a substantial UK gas producer, confirmed the successful arrangement of a EUR100 million 5-year senior secured bond issuance (“Bond”).
Proceeds of the Bond will be used to fund capital expenditure on IOG’s gas development project in the UK Southern North Sea, financing costs and general corporate purposes. It has a bullet repayment structure and an interest rate, payable quarterly, of 9.5 per cent per annum over the three month Euribor rate (with a floor of zero when this rate is negative as it is currently). It is callable after 3 years with an initial call premium of 50% of the coupon (i.e. repayable at a cost of EUR104.75 million if 3m Euribor is at zero or lower), declining by 10% every six months thereafter.
The Company has the option, subject to certain conditions and investor commitments, to issue additional amounts up to a maximum aggregate of EUR30 million. Tap Issues carry identical terms to the initial EUR100 million issue but may be issued at different prices.
Settlement date of the Bond will be 20 September 2019, giving an expected maturity of 20 September 2024. Application will be made to list the Bonds on the Oslo Børs.
This Bond commitment fulfils a major condition for completion of the farm-out transaction announced on 26 July 2019. The remaining Farm-out conditions are expected to be finalised in the near future, leading directly to Farm-out completion and Phase 1 Final Investment Decision (“FID”).
The Bond was marketed to institutional investors across the Nordics, UK, Europe and Asia. ABG Sundal Collier ASA acted as Sole Manager.
Andrew Hockey, CEO of IOG commented:
This Bond is a very significant step forward for IOG, fulfilling the key condition to Farm-out completion. Raising EUR100 million in debt finance demonstrates the robustness of our Core Project in the UK Southern North Sea, for which we will be fully funded at Farm-out completion. Farm-out completion will trigger Phase 1 FID which will be a major milestone for IOG, signalling the start of the project execution phase.