Santos to Raise $2.46 Billion With Share Issue, Gas Field Sale
09 Novembre 2015 - 1:50AM
Dow Jones News
SYDNEY— Debt-laden Santos Ltd. said it would sell a stake in a
gas field, issue new shares, and bring on board a Chinese
private-equity firm as a cornerstone investor in a package of
measures to raise 3.50 billion Australian dollars ($2.46
billion).
On Monday, Santos said it would seek to raise up to A$2.5
billion by issuing new shares to existing investors at A$3.85 each.
That represented a deep 35% discount to the stock's closing price
of A$5.91 on Friday.
The Adelaide-based company said it would raise a further A$500
million by issuing around 73.5 million new shares to a unit of
Chinese private-equity firm Hony Capital. The placement would be
made at A$6.80 a share, representing a 15% premium to Friday's
close.
Santos has also agreed to sell its 35% stake in the Kipper gas
field offshore Victoria state in southeastern Australia to Japan's
Mitsui & Co. Ltd. for A$520 million.
It comes nearly three months after Santos launched a sweeping
review of its business, bringing on board Deutsche Bank and Lazard
to advise on options for dealing both with its depressed stock and
overtures it says it has received for assets. Details of that
review were released at the same time as David Knox stepped down as
chief executive of Santos after seven years.
On Monday, Santos said Kevin Gallagher would succeed Mr. Knox as
managing director and CEO. Mr. Gallagher is currently CEO of
Australian engineering contractor Clough Ltd., and Santos said he
would likely start with the company early next year.
"The A$3.5 billion of capital initiatives reinforce the Santos
balance sheet and mark a significant step toward restoring long
term value for shareholders," said Executive Chairman Peter Coates.
The strategic review is now over, he added.
Late last month, Santos said it had rejected as too low a A$7.14
billion takeover offer from Bermuda-based Scepter Partners—a
private-equity firm backed by sovereign investors and wealthy
members of Asian and Gulf-based ruling families. The indicative
offer was worth A$6.88 a share in cash.
Santos, which was founded in 1954, focused in its early years on
domestic natural-gas production, building up a portfolio of assets
in Australia before broadening into oil output and countries
further afield by the late 1980s.
It is now producing and exploring in Australia, Papua New Guinea
and parts of Asia, including Indonesia and Vietnam.
Santos's market value has more than halved over the past year as
oil has plunged. Investors' primary concern is the company's debt,
even as Santos continues to invest heavily in a major gas project
on Australia's east coast.
Santos is among several companies that bet big on feeding Asia
with natural gas, anticipating continued growth in developing
nations' need for energy and, in particular, cleaner-burning fuels.
In Australia alone, more than $200 billion has been invested in
recent years on vast liquefied-natural-gas developments that have
positioned the country to more than triple LNG exports over the
next five years.
Santos's flagship $18.5 billion Gladstone project, being
developed in Queensland with Total SA, recently made its first LNG
shipment, but continues to suck cash from the Australian company.
Along with smaller operations, Santos also has a minority stake in
a $19 billion Exxon Mobil Corp.-led development in Papua New Guinea
that began exporting gas last year.
Write to David Winning at david.winning@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 08, 2015 19:35 ET (00:35 GMT)
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