25th Nov

Premier Oil Maintains Flow of Retail Bonds, Offering 5% due 2020


FTSE 250 oil exploration firm Premier Oil has this morning launched a retail bond on the LSE’s Order Book for Retail Bonds (ORB) exchange offering a 5% annual interest rate and a maturity date in 2020. 

Premier is the second oil company to come to ORB and its launch comes hot on the heels of the recent ‘tap’ offered by EnQuest which added to the £145 million the company raised in February. The company made a profit of £132 million in the six months to June 2013 and has a market capitalisation of £1.8 billion.   

Chief Executive, Simon Lockett, commented ‘We are delighted to announce the launch of Premier's debut sterling bond which will enable Premier to diversify its sources of debt finance.   

Subsidiary Guarantors

The bond represents senior unsecured debt, although it is guaranteed by subsidiary companies of Premier, defined as ‘Subsidiary Guarantors’; rather than the bond being secured against an asset this means that the cash flows of the subsidiaries will be used to repay bond investors if necessary. 

Private investors in these bonds would have the same status as the company’s banks in the case of default. 

Premier has previously issued bonds in the US and the Asian markets, and Tony Durrant, chief finance officer at Premier, says that despite the fact that he considers it an atypical issuer of bonds, the company was ‘anxious to take advantage of the current low interest rate environment by getting a fixed interest rate at this time'. 

North Sea Assets

The bonds have a minimum subscription of £2,000, and multiples of £100 thereafter with interest paid semi-annually in June and December; proceeds of the issue are to be used to increase investment in the North Sea assets of the company. 

Mr Durrant said  that Premier was happy to buck the recent trend toward reduced capital expenditure in the resource and commodities sector because it is a mid-cap company with production levels growing at up to 10% a year, 'Some of the larger companies have not currently got the capacity to grow production by that much’ he said. ‘We are raising this capital to allow us to increase our production levels further.’  

At 8:05am today (25th November 2013) Premier Oil PLC [LON:PMO] share price was +0.45p at 318.95p 

All documents in support of the issue, as well as further information can be found on Retail Bond Expert’s Current Issues tab. Investors should ensure that they fully understand the information that is contained within these documents and comprehend and accept the risks to which their capital may be exposed. 

If in any doubt Retail Bond Expert recommends that before participating, would-be investors seek professional advice appropriate to their level of financial literacy and investment experience.         

Add Your Comment