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Capital Markets

Tullow plans Sh65bn note issue to settle debt

The firm said new notes would be repaid in full in 2025. FILE PHOTO | NMG
The firm said new notes would be repaid in full in 2025. FILE PHOTO | NMG 

British oil explorer Tullow Oil says it intends to raise Sh66 billion ($650 million) through senior notes to settle debt incurred earlier but is due in two years’ time.

The firm said new notes would be repaid in full in 2025. They will be guaranteed by the company’s subsidiaries including the Kenya unit.

The interest will be payable semi-annually, but the rate, offering price and other terms are yet to be determined, and are subject to market conditions, it added.

In 2014, the oil explorer, whose Kenyan subsidiary has so far discovered commercial quantities of oil around Lake Turkana, raised $650 million through a note, enabling it to retire some of its debts.

The note ranks higher than other debt — meaning its payment is of utmost priority — as it is termed “senior obligations of the company and guaranteed by certain of Tullow’s subsidiaries.” Senior notes rank higher than the other debts as they have to be paid before others obligations are settled.

Tullow said last month it had pumped additional $2.9 billion (Sh293 billion) into the Kenyan operation targeting full-scale export of Kenya’s oil to begin in four years’ time.

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