Abu Dhabi’s ADNOC Distribution to raise approximately $1.64bn via combined share, bond offering

UAE’s Abu Dhabi National Oil Company (ADNOC) intends to offer approximately 375 million shares – around 3 per cent of the registered share capital of ADNOC Distribution – through an accelerated bookbuilding proposition at an offer price of Dhs4.36 per share to eligible institutional investors, it announced on May 26.

Alongside the share offering, ADNOC also intends to issue approximately $1.195bn senior unsecured bonds due in 2024 that are exchangeable into existing common shares of ADNOC Distribution, making up approximately 7 per cent of the company’s registered share capital under certain conditions (exchangeable bond), pursuant to a private placement to certain eligible investors outside the US.

The combined offering will not be available to the public in the UAE or any other jurisdiction, a statement said. Together, the share and – assuming exchange and settlement in shares of all of the exchangeable bonds in accordance with their terms – bond offering represent approximately 10 per cent of the registered share capital of ADNOC Distribution.

The blended price – Dhs4.82 – of the combined offering is approximately 5 per cent above the 3-month volume-weighted average share price of ADNOC Distribution, with a total transaction size of approximately $1.64bn.

The exchangeable bond offering will have a maturity of three years and will be issued at an issue price of 100 per cent with a coupon of 0.70 per cent per annum, payable semi-annually in arrears in June and December each year. The exchange premium will be 15 per cent above the reference price of ADNOC Distribution shares, resulting in an exchange price of Dhs5.01.

The transaction is the first combined equity and exchangeable bond offering in the GCC. The deal structure and financing aims to provide ADNOC with greater access to a broader investor base, including those that are interested in an equity-linked bond investment. The terms of the exchangeable bonds also provide an opportunity for the monetisation of ADNOC Distribution shares at a premium to the price of the share offering.

ADNOC Distribution has been included as part of the MSCI Emerging Markets Index, effective May 27, 2021, Morgan Stanley Capital International announced on May 11, 2021, making it one of only nine UAE publicly listed companies to be part of the index.

The final terms of the combined offering are expected to be announced following the completion of its bookbuilding process. Settlement of the share offering is expected to occur on or about May 31, 2021, while settlement of the exchangeable bond offering is expected to occur on or about June 4, 2021.

ADNOC has agreed to a lock-up period of 90 calendar days from the settlement date under the terms of both the share and exchangeable bond offering, the statement read.

An application is expected to be made for admission of the exchangeable bonds for listing and trading on the Vienna MTF, an exchange-regulated market operated by the Vienna Stock Exchange.

Dr. Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and managing director and group CEO of ADNOC, said: “At the time of ADNOC Distribution’s IPO, ADNOC conveyed its intention to sell additional ADNOC Distribution shares at the appropriate time, to increase liquidity and access to an attractive investment opportunity. Today’s announcement follows the placement of 10 per cent of the outstanding share capital in September 2020 and represents the first combined equity and exchangeable bond offering in the GCC.

“Assuming all the exchangeable bonds are exchanged and settled in shares, the transaction will increase the free float in ADNOC Distribution to 30 per cent, with ADNOC retaining a 70 per cent strategic stake in the company, as we continue to see significant growth potential.”

Citigroup Global Markets Limited and First Abu Dhabi Bank are acting as joint global coordinators and joint bookrunners for the share offering. Citigroup Global Markets Limited is acting as the global coordinator and bookrunner, with Abu Dhabi Commercial Bank and First Abu Dhabi Bank acting as co-bookrunners, for the exchangeable bond offering, the statement added.