Tullow Oil shares tank as it announces $300m bond auction
Tullow Oil's latest bid to shore up its balance sheet sent the oil explorer's shares tumbling to a near three-month low.
The FTSE 250-listed firm said it would offer $300m (£234.5m) convertible bonds. It comes just months Tullow agreed a $3.5bn loan deal, with access to $800m in April next year and an extra $200m available if needed.
Read more: S&P downgrades Tullow amid low oil prices
Ian Springett, Tullow's chief financial officer, said: "The proposed convertible bond issue will further diversify Tullow Oil's sources of funding and give the company access to a new investor base."
"As per our most recent trading statement, our focus will continue to be on strengthening the balance sheet and deleveraging the business."
Tullow's shares slipped as much as 16.25 per cent to 201.5p per share today, before recovering some losses to close down at 210.5p.
Tullow has sought additional funding as low oil prices have helped its debt pile swell from $4bn at the end of last year to $4.5bn in April.
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Colin Smith, director of oil and gas research at Panmure Gordon told City PM: "The fact they've come back to the market with a new debt instrument has reminded people about the fragility of Tullow's balance sheet, particularly if the start-up at TEN proves less than flawless."
Tullow recently said that the large TEN project, which is expected to add 10,000 barrels of oil this year as well as a corresponding revenue increase, is due to start generating in a matter of weeks.
