The indebted oiler this morning unveiled a proposed a £607mln (US$790mln) rights issue with the aim of paying down debt to unlock the group’s portfolio of expansion and growth projects.
Existing shareholders will receive rights to buy 25 new shares for every 39 shares they own, at a purchase price of 130p per share - a huge 45% discount to Thursday’s closing price.
“In our opinion, the market has been waiting for the heavily indebted mid-cap E&P sector to recapitalise. Tullow’s approach is a sensible one – wait for the business to get back to positive FCF (which they are) and not be forced into asset sales.
“In this case, flexibility retains with the company, not the banks.”