Z Energy decides against bond issue

Z Energy decides against another bond issue for now, says timing not right after carefully looking at the market

29th Jul 11, 10:40am by Alex Tarrant

Z Energy has decided against a further bond issue, saying after carefully looking at the market, it considered the timing was not right for another issue.

See its statement to the NZX on the decision below:

Z Energy Limited (‘Z Energy’) today said that after careful consideration it would not at this time be proceeding with an additional bond issue beyond the issue currently in the market.

On 19 July 2011, Z Energy announced that demand for its current offer of retail bonds, which have an interest rate of 7.25% p.a. and mature on 15 August 2018, had been exceptionally strong and oversubscriptions of NZ$50 million were to be accepted, increasing the offer size to NZ$150 million.

Following this strong investor support for the current bond offer and with a number of investors missing out, Z Energy investigated the possibility of an additional bond offer to support investors wanting to increase their participation in the Z Energy business.

Z Energy Chief Executive Mike Bennetts today said the decision not to re-enter the bond market was a question of timing.

“We’re very pleased with the strong investor support for Z Energy’s current issue but, after looking carefully at the market, we have decided that the timing is not right for another offer of bonds.”

Mike Bennetts said it was possible that Z Energy would return to the bond market in the future.

“At the completion of the existing issue, we will have undertaken two very successful retail bond issues in the New Zealand bond market over the last 12 months and we value the support shown to us by domestic investors. We have decided we will close the current bond offer in a way that leaves investors with a clear market and leaves our options open for a further offer at some time in the future."

No applications for bonds issued by Z Energy will be accepted or money received unless the subscriber has received the Simplified Disclosure Prospectus for the offer. The minimum application amount in respect of the bonds is NZ$5,000 and in multiples of NZ$1,000 thereafter.

The bonds that are currently being offered are unconditionally guaranteed by Z Energy, Aotea Energy Limited, Greenstone Energy Holdings Limited, Greenstone Energy Finance Limited, Harbour City Property Investments Limited, Big Tree Stations Limited and Mini Fuels & Oils Limited ('Z Energy Group').

The ultimate joint owners of the Z Energy Group, New Zealand Superannuation Fund and Infratil, do not guarantee the current bonds. The Z Energy Group's banks and bondholders share the same security over Z Energy's and the guarantors' assets on an equal ranking basis. This security ranks behind Shell's security over petroleum products that Shell has supplied for which it has not been paid, and their proceeds, and statutorily preferred creditors.

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13 Comments

by Nicholas Arrand | 29th Jul 11, 10:52am 1311893534

Wrong timing? More like ~ wrong interest rate!

by Alex Tarrant | 30th Jul 11, 1:23pm 1311989030

We're working on a proper bond section. Would include news on companies which have bonds out there, so watch this space.

Cheers

by The best statu… | 29th Jul 11, 11:43am 1311896616

I have heard that one plant in the operation is making product at a large loss to get volume as they are trying to sell the plant, volume through a plant looks good I guess and they can hide the loss somewhere else in the Greenstone operation. It is a plant in Petone that supplies Unilever with chemicals used in the manufacture of laundry powders and helps to make brands such as Persil & Sunlight Dishwashing Liquid. They also export to Australia, at a loss I guess as well. Under cost sales are around 500-1000 tonnes per month and the plant may be losing hundreds of thousands of dollars per month.

This is also our superannuation fund at work for you. So bondholder beware.

by Sheena Thomas … | 29th Jul 11, 4:31pm 1311913885

@The best status: I don’t know where you might have come across such misinformation but I can confirm that Z Energy’s Chemicals business, including the plant in Petone, is operating as a sustainable, commercial business. It is a profitable business operating on a standalone basis albeit that it is governed through the Z Energy executive team as are our interests in other businesses that are beyond our typical fuels business.

Sheena Thomas, Communications Advisor, Z Energy

by powerdownkiwi | 29th Jul 11, 5:26pm 1311917188

Sheena Thomas

Until your businesses operate without chewing into finite physical resources, you cannot claim to be sustainable.

Please find another word. - I suggest "temporarily maintainable until the top of the relevant gaussian".

You could just shorten that to 'temporary'

http://www.peakoil.net/uhdsg/

http://www.hubbertpeak.com/bartlett/hubbert.htm

by steven | 31st Jul 11, 9:08am 1312060123

This is marketing / PR doid, she's long sold her soul (if she ever had one) for money....

I jsut had an argument with Puhoi Valley about fractose in their products....they told me it was crystaline Fructose as opposed to HCFS lke there is not difference but she tried to sday their was...would answer Ws likw is it made from sorn or not....so anyway I buy different branss now.

regards

by goNZ | 30th Jul 11, 10:54pm 1312023286

Sheena you may have seen this - re enviro issues

Environmentalism Refuted http://mises.org/daily/661

Mises Daily:Friday, April 20, 2001 by George Reisman

by steven | 31st Jul 11, 9:09am 1312060190

The only thing you can fine is a decade old written by a long senile never was?

regards

by steven | 31st Jul 11, 9:27am 1312061242

Sustainable only in the fact that your plant makes a net profit on present transactions on each day.

Start to think medium and long term.

Consider that Dow chemicals was complaining the other day that its feed stock was too expensive for what its customers will pay for the end product.

One of your own senior management team complained that Z only made [enough] money when the fuel price was low and ppl bought more.....

I suggest you research Peak oil and look at what that does to the price of a barrel of oil and hence your the cost of feed stock, medium and long term. Then look up some interesting comments and data that shows that the developed world's transport fuel consumption has peaked and will decline. Then consider how many petrol stations will be needed in the future and how much of "Z" 's core business is highly fossil fuel and cheap fossil fuel at that dependent.

Then consider how long Z will last...5 years? 10? maybe consider moving to a new job/career. I did a decade back, the writing was on the wall in my sector and in the last 7 years its been obvious to those who think strategically Peak oil will be a tremendious negative change for how things are done at present.

regards

by David B | 29th Jul 11, 5:27pm 1311917243

Ignore powerdownkiwi, Sheena. He's just one of the board's resident nutters.

by powerdownkiwi | 30th Jul 11, 8:31pm 1312014702

Just one who prefers facts to spin.

You wouldn't understand.

Tangled webs and all that :)

by steven | 31st Jul 11, 9:16am 1312060596

If a "nutter" is someone who lives with facts, data, logic, maths, science, engineering, management and thought, sign me up....I'd rather me a "nutter" than a loony libertarian with my head in the sand chanting "im free" "im free"....

regards

by Gareth Vaughan | 8th Aug 11, 10:09am 1312754995

Z statement today: Z Energy Limited („Z Energy‟) closed its retail bond offer on 5 August 2011, having successfully raised $150 million (which includes $50 million in oversubscriptions).

The offer opened on 8 July 2011 with an interest rate of 7.25% p.a. and a maturity date of 15 August 2018. The initial target was to raise NZ$100 million from New Zealand retail investors, but strong investor demand extended this to $NZ150 million.

Z Energy Chief Executive Mike Bennetts today said he was very pleased with the level of investor support for Z Energy. The funds raised will be used to pay down bank debt and provide a more flexible corporate funding structure.

“We welcome new investors choosing to invest in Z Energy. We‟re very pleased with the level of investor confidence and support both for Z Energy and the New Zealand market and we are determined to reward that support through building a world-class Kiwi company,” he said.