Z decides against additional bond issue

Z Energy Limited (‘Z Energy’) today said that after careful consideration it would not be launching an additional bond issue this calendar year.

On 19 July 2011 Z Energy said that demand for its retail bonds, which have an interest rate of 7.25% p.a. and mature on 15 August 2018, had been exceptionally strong and oversubscriptions of NZ$50 million were to be accepted, taking the issue size to NZ$150 million.  

Following strong investor support for the current issue and with a number of investors missing out, the company has investigated the possibility of an additional bond issue with a maturity in September 2019.

Z Chief Executive Mike Bennetts today said that after careful consideration the company had decided not to re-enter the bond market immediately.

“We’re very pleased with the strong investor support for Z Energy’s current issue but, after looking carefully at the market, we have decided that the timing is not right for another issue.”

Mike Bennetts said there was the possibility of additional bond offers coming to market over the coming weeks and the chance that an additional Z Energy issue could create some confusion in the minds of investors.

“Also, what we are seeing in terms of movement in the future yield curve and the feedback from the investment community about an eight year issue has led us to the decision that the time is not right for an additional issue.”

 Mike Bennetts said it was possible that Z Energy would return to the bond market in the future but not this calendar year.

“We’ve been very pleased with the strong support for our company from New Zealand investors and with the very strong demand for our bonds. We have decided we will close out the current issue in a way which leaves investors and the market clear and leaves our options open in terms of a further issue at some other time."

No applications for the current bonds issued by Z Energy will be accepted or money received unless the subscriber has received the Simplified Disclosure Prospectus for the offer.  The minimum application amount in respect of the current bonds is NZ$5,000 and in multiples of NZ$1,000 thereafter.

The current bonds are unconditionally guaranteed by Z Energy, Aotea Energy Limited, Greenstone Energy Holdings Limited, Greenstone Energy Finance Limited, Harbour City Property Investments Limited, Big Tree Stations Limited and Mini Fuels & Oils Limited ("Z Energy Group").  The ultimate joint owners of the Z Energy Group, New Zealand Superannuation Fund and Infratil do not guarantee the current bonds.  The Z Energy Group's banks and bondholders share the same security over Z Energy's and the guarantors' assets on an equal ranking basis.  This security ranks behind Shell's security over petroleum products that Shell has supplied for which it has not been paid, and their proceeds, and statutorily preferred creditors.