THURSDAY, March 28, 2024
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Tender offer for PTTEP senior notes

Tender offer for PTTEP senior notes

PTT Exploration and Production Plc (PTTEP, Baa1 stable) said last Wednesday it would launch a cash-funded tender offer for its US$500 million (Bt17.6 billion), 3.707-per-cent senior unsecured notes due in 2018.

The tender is credit positive because it will reduce leverage and allow the Thailand-based upstream oil and gas company to strengthen its capital structure amid protracted low oil prices, Moody’s Investors Service said yesterday.
If all the notes are tendered, PTTEP’s total adjusted borrowings will decrease to $3.4 billion from $3.9 billion as of March 31. 
As a result, on a pro forma basis, leverage as measured by retained cash flow/adjusted debt is expected to improve to about 80 per cent from 70 per cent at March 31. 
Besides reducing absolute debt levels, the transaction will lower PTTEP’s interest expense by $18.5 million per year, thereby contributing to stronger cashflow generation. 
PTTEP’s pro forma adjusted EBITDA/interest expense is projected to strengthen to 14.2 times from 13.3 at March 31. 
 
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