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Abu Dhabi, UAESunday 23 September 2018

Topaz Marine offers buyback for $350 million in senior notes due in 2018

Investors have until July 21 to accept offer

Topaz Marine has launched a US$3530m buyback. Photo courtesy Topaz Energy and Marine
Topaz Marine has launched a US$3530m buyback. Photo courtesy Topaz Energy and Marine

Topaz Marine, the Dubai-based oil services company, said yesterday that it is offering to buy-back all of its outstanding US$350 million senior notes that are due in 2018 from the holders of the paper.

The tender offer on the 8.6 per cent notes will expire on July 21 at 5pm New York time, the company said in a regulatory filing. Topaz said that it was offering to pay holders $1,044 per $1,000 in principal amount.

The company said it was undertaking the buy-back in order to refinance the debt in a private placement to qualified investors outside of the United States. That new sale will be for $375m and will be guaranteed on a senior unsecured basis by Topaz and by certain of its subsidiaries. It did not say what the coupon on the new notes would be.

Topaz, a subsidiary of Oman-based Renaissance Services, has suffered in recent years from lower oil prices. The company's recorded a $3.3m loss in the first quarter due to what is said was ongoing challenging conditions for the industry.

Goldman Sachs, HSBC, and Standard Chartered are managing the tender offer on the $350m buy-back.

Despite the gloom surrounding low oil prices, a renewed emphasis on reducing operating costs for oilfields while maximising production is expected to lift the outlook for oil services firms later this year.

Low oil prices, which have been a fixture for more than two years, had slowed spending from oil majors and eased demand for offshore support vessels.

Abu Dhabi-based Gulf Marine Services (GMS), another oil services company, said it anticipated clients returning their focus on production targets.

“We anticipate that most, if not all, of the work lost due to cancellations or the non-renewal of contracts in 2016 will be re-tendered this year,” Duncan Anderson, the chief executive of GMS, said in March.

The company, which provides offshore vessels for the oil, gas and renewables sectors, reported a 60.8 per cent drop in pro­fit to $29.4m last year compared with $75m in 2015. Revenue fell 22 per cent to $179.4m, with utilisation decreasing to 70 per cent from 98 per cent the previous year.

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