Austrian oil and gas producer OMV’s shares came under pressure after the company launched a share and hybrid bond issue worth about €1.4bn ($2bn) to fund recent acquisitions in north Africa and Turkey.
The move has the backing of OMV’s two biggest shareholders – OIAG, the Austrian state’s investment agency, and International Petroleum Investment, an Abu Dhabi investment fund, which together control more than half of the company’s shares.
OMV was forced to consider a capital raising after its €1bn purchase last year of a controlling stake in Petrol Ofisi, the Turkish fuel retailer, and its $866m acquisition in January of exploration and production assets in Tunisia.
The deals increased OMV’s gearing – a measure of debt as a proportion of equity capital – to 47 per cent, well beyond its medium term target of 30 per cent.
OMV said late on Monday that it would issue as many as 27.2m new shares, or 9.1 per cent of the existing share capital, at a ratio of one new share for every 11 existing shares. The company set the maximum subscription and offer price at €33, meaning it could raise as much as €900m.
The company will also issue subordinated hybrid notes – low-ranked bonds with some equity characteristics that can be treated as quasi-equity by rating agencies. The hybrid issue price and coupon are yet to be determined. However, OMV said it would aim for “benchmark size”, which is typically about €500m.
OMV’s shares fell 2.9 per cent to €29.09 on Tuesday, continuing a recent bad run sparked by the company’s exposure to turmoil-hit countries in north Africa and the Middle East.
Until recently, Libya accounted for about a 10th of OMV’s total output and the company has also been forced to withdraw employees from strife-affected Yemen.
OIAG, which holds 31.5 per cent of OMV, said it plans “to continue to be a core shareholder and hold a controlling state of more than 30 per cent”. IPIC informed OMV that it will exercise its subscription rights for the 20 per cent it owns.
Bank of America Merrill Lynch, Barclays Capital, Deutsche Bank, JPMorgan and UniCredit are joint co-ordinators and bookrunners for the capital increase.