APA Group (ASX:APA), Australia’s largest natural gas infrastructure business, announced it has successfully completed its current debt refinancing program, having today executed a new syndicated facility agreement.
New facilities, totalling $1.45 billion, refinance the $900 million syndicated bank debt facility due in June 2012 and also enable the early refinancing of the $515 million facility due in July 2013. As a result of this transaction APA now has no further debt refinancing obligations until the maturity of a tranche of its 2003 USPP in September 2013 ($AUD 113 million).
The new facilities, which have been provided by a syndicate of 15 domestic and foreign banks, represent an oversubscription of almost three times the initial launch of $500 million, demonstrating the strong support that lenders continue to show for APA. The new facilities are available to APA in three equal tranches of $483 million over terms of two, three and four years.
APA Chief Financial Officer, Peter Fredricson said that APA had pursued a syndicated bank refinancing strategy in the face of very uncertain offshore markets. “We received close to three times the commitment we originally sought, and at very compelling pricing when considering the volatility that exists in debt capital markets globally.
“As a result, we took advantage of this excellent opportunity to refinance both our 2012 and 2013 debt at pricing that ultimately delivers a considerable benefit to APA security holders, through the interest cost savings that we will experience over the next two years in particular.”
Mr Fredricson said that whilst global debt capital market programs were available to APA for this refinancing, terms available in the short term bank debt markets were more attractive.
“Notwithstanding this, our strategy remains focused on achieving a longer term, flatter debt profile by issuing opportunistically into available global and Australian debt capital markets when appropriate” said Mr Fredricson.
The new facility has been locked in at pricing that is below the average pricing that to date has been incorporated in APA’s current forecasts and market guidance in respect of total interest cost for FY2012. As a result, APA is confident that interest cost for the current financial year will come in at a level below the low end of that guidance.