Indonesian oil and gas company Medco Energi Internasional is planning to launch a $450m loan into syndication to support its acquisition of a subsidiary of US crude oil producer ConocoPhillips.
Medco has mandated six lead banks to arrange the facility. They are ANZ, DBS, ING, Morgan Stanley, MUFG and Standard Chartered.
The bridge loan has a tenor of two years. Medco is planning to issue a bond for the takeout.
The borrowing is scheduled to be launched into syndication early next week, said a banker close to the situation.
Medco said in a press release in December 2021 that it has agreed to acquire ConocoPhillips Indonesia Holding from Phillips International Investment. Both are subsidiaries of US-based crude oil and natural gas developer ConocoPhillips
ConocoPhillips said in a separate press release that the transaction is worth $1.355bn.
ConocoPhillips Indonesia owns ConocoPhillips (Grissik), the operator of the Indonesia Corridor Block Production Sharing Contract with a 54% working interest. The Corridor has two producing oil fields and seven producing gas fields. The majority of its production is gas sold under long term contracts to Indonesian and Singaporean counterparties.
ConocoPhillips also has a 35% stake in Transasia Pipeline Co, through which Medco Energi will own a minority interest in the gas pipeline network supplying Central Sumatra, Batam and Singapore customers.
Medco Energi is expected to have oil and gas production of 155,000 barrels of oil equivalents per day and capital expenditure of $275m after the transaction in 2022.
Fitch Ratings said in a press release in December that it expects Medco Energi’s financials to remain robust after the acquisition. It added that Medco Energi will fund 63% of the transaction through debt and the remaining through equity, including internal cash and a proposed equity raising of up to $200m.
The company issued a $400m bond in November 2021 also to support the acquisition. The 144A/Reg S seven non-call three year deal was priced at 98.376 to yield 7.25%, with a coupon of 6.95%.
ANZ, DBS, ING, Morgan Stanley and Standard Chartered arranged that bond.