T'dad Petroleum bondholders wary of exchange offer

A group of Trinidad Petroleum Holdings Ltd (TPH) bondholders is reportedly dissatisfied with the terms of the company’s refinancing options.

International news outlets Bloomberg and International Financing Review (IFR, a subsidiary of Thomson Reuters) both reported yesterday that the bondholders were “pushing back against a proposed debt exchange designed to provide relief against looming bond maturities.”

In a release on April 15, TPH announced the exchange programme to bondholders of the 9.75 per cent unsecured 2019 notes and six per cent 2022 notes, offering to exchange them for new 9.75 per cent secured 2026 notes. The 2019 bondholders can also exchange their notes for cash up to US$425 million, but that could be increased to US$600 million.

Bondholders have until May 10 at 5pm Eastern Standard Time to respond to the company’s offer.

Both Bloomberg and IFR, however, have reported that the creditors’ adviser, BroadSpan Capital, an investment banking firm with offices in Miami, Brazil and Colombia, has rejected the company’s consent solicitation for the offer and are seeking a deadline extension and modifications to the offer.

According to Bloomberg, creditors, through BroadSpan, said deadlines proposed by TBH are “are unreasonable and do not provide adequate time to evaluate the proposal.” They are also concerned about the lack of inter-creditor equity and the apparent subordination of new bonds offered by the company compared with certain other company liabilities. The limited information from TPH is also an issue, as that “makes it nearly impossible to undertake a reliable assessment of the creditworthiness” of the company going forward.

Trinidad Petroleum Holding Company Ltd had received updated credit ratings from Standard and Poor’s (BB) and Moody’s (Ba3), which, while still considered “speculative” or non-investment grade, are a notch above the rating of its predecessor, Petrotrin.

Trinidad Petroleum has a US$850 million bond due in August and a US$750 million bond in 2022, both incurred by Petrotrin to finance its failed gas to liquid and ultra-low sulphur diesel plants.

Finance Minister Colm Imbert said at a press conference last week, “By all accounts (the refinancing) is going quite smoothly we will know in the next week or so how successful the bankers are, led by Credit Suisse, but I have no reason to feel they won’t resolve this.”

Imbert did not respond to Newsday’s request for comment on creditor concerns. Nor did TPH chairman Wilfred Espinet.