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Retail bond offer from Infratil, Super Fund fuel firm to offer 7.35%

Retail bond offer from Infratil, Super Fund fuel firm to offer 7.35%

Greenstone Energy, the holding company of the Shell New Zealand fuel retail and distribution business, is expected to look to raise up to NZ$200 million through a six year retail bond offer paying investors annual interest of 7.35%.

This is according to a note sent to clients by Westpac Institutional Bank.

Greenstone said last month that documentation for the offer was being developed.

According to the Westpac note, Greenstone would seek to raise NZ$100 million but have the capacity to accept further subscriptions of up NZ$100 million. The offer, which is not expected to have a credit rating, is expected to open this month.

Infratil and the New Zealand Superannuation Fund bought Shell’s New Zealand downstream, or distribution and fuel retail business, for NZ$696.5 million in April. The deal included a 17.1% stake in the Marsden Point based New Zealand Refining Company.

Proceeds from the bond offer will be used to repay some of Greenstone's NZ$350 million worth of bank debt.

Infratil recently said that although Greenstone has bank facilities with ANZ, BNZ, HSBC and Westpac through until 2013, bond funding had the attraction of being longer term and providing diversification. The response from brokers and investors to the announcement of the intention to issue bonds was very positive, Infratil added.

The Shell downstream business last year produced earnings before interest, tax, depreciation and amortisation of NZ$138 million on a current cost basis, which strips out the addition of a  NZ$38 million stock value adjustment. Infratil expects a similar performance this year. Last year’s revenue was NZ$2.15 billion and reported earnings before interest and tax NZ$157 million. Click here to read an Infratil presentation on the Shell business.

Greenstone CEO Mike Bennetts told in a Double Shot interview in June that the firm might expand into the so-called upstream side of the energy business, oil and gas exploration, in the long-term.

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