OMV strengthens capital base to fund growth with share capital increase and convertible bond issue
Posted: 8 December 2004
OMV intends to launch a share capital increase and convertible bond issue to refinance the acquisition of 51% of Petrom as well as to strengthen its capital base for continued expansion in its core markets. With Petrom’s assets OMV will be the leading Central and Eastern European oil and gas company in terms of total proved reserves and production, refining capacity and oil products sold. The closing of the Petrom acquisition is expected to take place by the end of this year or early next year.
OMV’s CFO David Davies said: ”The combined offering of equity and a convertible bond will allow us to access equity, convertible and debt investors, diversify our funding sources and will help us to maintain our financial flexibility through the commodity cycle. It also strengthens OMV’s position for further profitable growth in our core markets.”
Wolfgang Ruttenstorfer, CEO of OMV, commented: “This capital raising will help us to continue to grow our company and improve its efficiency. As the leading oil and gas company in Central and Eastern Europe we are well positioned to further grow our strong position in this region.”
Capital increase and convertible bond issue
The Executive Board of OMV Aktiengesellschaft, with the approval of the Supervisory Board, has decided to increase the share capital of OMV through the issuance of up to 3 million new shares. The capital increase will be carried out by granting pre-emptive rights to existing shareholders entitling them to subscribe for one new share for every nine OMV shares held. The new shares will be entitled to full dividends for the current fiscal year 2004. The maximum offer and subscription price will be EUR 250.
Further, the Executive Board of OMV Aktiengesellschaft, with the approval of the Supervisory Board, has decided to issue up to 2 million bonds in an aggregate principal amount of up to EUR 550 million, each bond being initially convertible into one share of OMV Aktiengesellschaft. The convertible bonds will have a maturity of 4 years, a minimum coupon of 0% and a maximum conversion price of EUR 350. The convertible bonds will be offered by granting pre-emptive rights to existing shareholders entitling them to subscribe for two bonds for every 27 OMV shares held.
The price at which new shares can be subscribed and at which the convertible bonds will be issued will be determined after the expiry of the subscription and offer period on or about December 16, 2004 . Both securities will be listed on the Vienna Stock Exchange.
Deutsche Bank, Erste Bank and Merrill Lynch will be lead managers for the Offerings.
Active leader in attractive CEE market
Following the acquisition of 51% of Petrom, OMV will have an overall market share of 18% of oil products sales in the twelve countries of the company’s core Danube region from southern Germany to Romania . In Exploration and Production the acquisition of Petrom will add 208,000 boe/d of production and, based on OMV estimates, reserves of approximately 1 billion boe as of December 31, 2003 .
The Petrom acquisition will add two refineries with combined crude processing capacity of approximately 160,000 bbl/d, increasing OMV’s total crude processing capacity to approximately 540,000 bbl/d. OMV’s Upstream : Refining Ratio will increase to above 0.5:1, which brings additional stability for the integration of the group’s activities. Finally, the acquisition will add approximately 600 retail outlets, which will increase OMV’s retail network to approximately 2,400 sites. Additionally, OMV will maintain its growth in the international E&P business, strengthen its position in gas and reinforce the position and integration of petrochemicals.
Petrom acquisition
The closing of the transaction is expected by the end of this year or early next year. OMV will then pay EUR 669 mn for the 33.34% stake of Petrom sold by the Romanian privatization agency and raise its Petrom stake to 51% through an increase in share capital of Petrom, for which OMV will pay an additional EUR 830 mn. This capital will be injected into Petrom to finance future investments. At the closing of the acquisition Petrom’s share ownership is expected to be as follows: OMV 51.00%, Romanian Ministry of Economy and Commerce 40.74%, EBRD 2.03% and a free float of 6.23%. Following the closing of the acquisition, OMV will consolidate Petrom into its financial statements.
Posted by Alexander Lindsay, Editor Pipeline Magazine
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