Origin prices hybrid capital securities

Origin Energy announced the successful pricing and allocation of a €1 billion hybrid capital issuance with the proceeds subsequently swapped into approximately $1.4 billion Australian dollars.

Origin expects that the hybrid will be awarded 50 per cent equity credit for ratings purposes from Standard & Poor’s and Moody’s, thereby supporting Origin’s current credit ratings.

Origin Executive Director, Finance and Strategy, Karen Moses said, “Historically, Origin has enjoyed a strong level of support from investors across debt, hybrid and equity markets. This is demonstrated by the successful issue of €800 million and US$800 million senior unsecured notes in October 2013, together with the successful pricing of this €1 billion hybrid.”

“The issuance of these hybrid securities will complete Origin’s financing associated with the acquisition of interests in two exploration permits located in Western Australia’s prospective Browse Basin. Additional funds raised will be used for general corporate purposes,” Moses said.

The hybrid is Euro-denominated and has been hedged into Australian dollars, is subordinated, matures after 60 years and can be redeemed by Origin at years 5 and 10 or on any interest payment date thereafter. The hybrid pays fixed semi-annual interest at a rate of 4.00 per cent per annum for the first 5 years and thereafter at reset rates in accordance with the terms and conditions. After hedging to Australian dollars, the cost to Origin will be 7.91 per cent per annum for the first 5 years. The hybrid instrument is treated as debt for accounting and taxation purposes. The hybrid terms do not include any rights to convert into Origin ordinary shares.

The settlement of the offering is expected to occur in mid-September 2014 and is subject to customary conditions.

UBS Limited acted as structuring advisor on the hybrid capital raising and Barclays Bank PLC, Goldman Sachs International and UBS Limited were Joint Lead Managers.

Press Release, September 9, 2014; Image: Origin