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Caltex Australia Ltd. is targeting a selloff of A$300 million worth of bonds to raise much needed additional capital amid the shutdown of its 57-year old Kurnell refinery in Sydney.
Caltex, in a statement to the Australian Securities Exchange, said it would raise $300 million through an ASX-listed offer of dated, direct, unsecured, subordinated and cumulative notes. Priced at $100 each, the noted will be offered to retail and institutional investors.
"The notes represent Caltex's first retail targeted capital markets transaction since listing on the ASX, and provides investors with a new investment opportunity in Caltex," chief financial officer Simon Hepworth said in the statement.
The money will be to write off debt, pegged at $617 million at the end of 2011.
The 20-year notes have 2037 as maturity date. They are expected to pay the three-month bank bill rate plus a margin of between 4.5 per cent and 4.75 per cent.
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The oil refiner, which is owned by Chevron Corp. at 50 per cent, remain confident it would get sufficient investor support for the capital raising despite doubts cast by ratings agency Standard & Poor's on its balance sheet last week. SP placed the company's credit ratings on a negative watch on the day following the announcement of Kurnell refinery's closure.
"SP clearly don't like the volatility in the refining business ... they see increased risk from the transition period and investment in the new terminal," Mr Hepworth told media on Tuesday, adding the company will remain committed to its current BBB+ credit rating.
"Our view is those cashflows over the transition are largely self funding, cash inflow benefits will offset outflows."
Over 300 jobs will be lost over the next two years from the closure of the Kurnell refinery, a decision prompted by supply chain restructuring.
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