“We are pleased with the strong support from our financiers, banks, and bond investors. It illustrates the confidence the market has in APA, including the acquisition of the Alinta Pilbara business,” APA CFO Garrick Rollason said.
“This funding enables APA to pursue our growth strategy and invest in the energy transition and, ultimately, our ambition to support our customers to decarbonise their operations, particularly in remote-grid generation regions.
“We remain focussed on ensuring our debt funding is well diversified with the ability to access funds from a variety of markets.”
Syndicated Term Loan
Strong support from more than 30 new and existing financiers enabled APA to establish a new syndicated term loan facility comprised of a 7-year AUD $750 million tranche and a 10-year $500 million tranche. Both tranches have been swapped into fixed rates. The loan syndicate includes leading Australian and Asian banks.
Hybrid Securities
The €500 million in hybrid subordinated capital securities was also strongly supported by Euro bond investors across Europe, the UK and Asia. The offer was competitively priced and significantly oversubscribed, reinforcing support for both APA and hybrid securities. The securities will be listed on the Singapore Exchange.
Moody’s and S&P are expected to treat these securities as 50 per cent equity and 50 per cent debt for the purposes of assigning credit ratings to APA’s senior debt.
The tax deductibility of the hybrid and the 50 per cent equity credit applied by the rating agencies ensures the hybrid represents a competitive cost of capital. APA expects hybrids to be a long-term feature of our capital structure.
Key features of the hybrid capital securities include:
- 60-year maturity redeemable at par from the first call date in 2029 and on each interest payment date thereafter
- face value of €500 million and a coupon of 7.125% per annum up to the first call date (subject to interest rate resets and step ups if not called at that time)
- subordinated to senior debt and no equity conversion features
- swapped back in AUD to the first call date