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ADNOC Sells 3% of its Distribution Unit

Logos of ADNOC (Reuters)
Logos of ADNOC (Reuters)
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ADNOC Sells 3% of its Distribution Unit

Logos of ADNOC (Reuters)
Logos of ADNOC (Reuters)

Abu Dhabi National Oil Company announced the successful closing of its offering of approximately 375 million shares in ADNOC Distribution, approximately 3 percent of the registered share capital of ADNOC Distribution.

The securities referred to herein may not be offered or sold in the United States unless registered under the US Securities Act of 1933, as amended, or offered in a transaction exempt from, or not subject to, the registration requirements of the US Securities Act and in compliance with applicable United States state law.

It also issued approximately $1,195 billion of senior unsecured bonds due 2024 that are exchangeable into existing shares of ADNOC Distribution constituting approximately 7 percent of the registered share capital of ADNOC Distribution, under certain conditions.

“This announcement does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for, securities to any person in the United Arab Emirates, the United States, Australia, Canada, Japan or Saudi Arabia, or in any jurisdiction in which such offer or solicitation is unlawful,” read the company’s statement.

The combined offering was placed at a blended price of AED 4.82 ($1.1) per share, which is 5.7 percent above the current 3-month volume-weighted average share price.

The Exchangeable Bonds, with a maturity date of 2024, are denominated in US dollars and bear a coupon of 0.70 percent, said the company.

The Exchangeable Bonds are issued at an issue price of 100 percent and will be exchangeable into existing shares of ADNOC Distribution at an exchange price of AED 5.01 ($1.37) under certain conditions.

Settlement of the Share Offering is expected to occur on or about May 31, and settlement of the Exchangeable Bond Offering is expected to occur on or about June 4.

UAE Minister of Industry and Advanced Technology and Managing Director and Group CEO of ADNOC Sultan Ahmed al-Jaber said the success of this innovative and pioneering Combined Offering, the first of its kind in the GCC, highlights the attractive investment opportunities and environment provided by ADNOC, Abu Dhabi, and the UAE.

The "innovative deal structure" has the potential to increase the free float of ADNOC Distribution to 30 percent assuming the Exchangeable Bonds are exchanged and settled in shares, and ADNOC will retain at least a 70 percent strategic stake in the company as it continues to see significant growth potential in ADNOC Distribution, according to Jaber.

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China Launches Late Stimulus Push to Meet 2024 Growth Target

FILE PHOTO: A worker works on a building under construction in Beijing's Central Business District (CBD), China July 14, 2024. REUTERS/Tingshu Wang/File Photo
FILE PHOTO: A worker works on a building under construction in Beijing's Central Business District (CBD), China July 14, 2024. REUTERS/Tingshu Wang/File Photo
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China Launches Late Stimulus Push to Meet 2024 Growth Target

FILE PHOTO: A worker works on a building under construction in Beijing's Central Business District (CBD), China July 14, 2024. REUTERS/Tingshu Wang/File Photo
FILE PHOTO: A worker works on a building under construction in Beijing's Central Business District (CBD), China July 14, 2024. REUTERS/Tingshu Wang/File Photo

China's central bank on Friday lowered interest rates and injected liquidity into the banking system as Beijing assembled a last-ditch stimulus assault to pull economic growth back towards this year's roughly 5% target, Reuters reported.
More fiscal measures are expected to be announced before China's week-long holidays starting on Oct. 1, after a meeting of the Communist Party's top leaders showed an increased sense of urgency about mounting economic headwinds.
On the heels of the Politburo huddle, China plans to issue special sovereign bonds worth about 2 trillion yuan ($284.43 billion) this year as part of fresh fiscal stimulus, two sources with knowledge of the matter have told Reuters.
Capital Economics chief Asia Economist Mark Williams estimates the package "would lift annual output by 0.4% relative to what it would otherwise have been."
"It's late in the year, but a new package of this size that was implemented soon should be enough to deliver growth in line with the 'around 5%' target," he said.
Chinese stocks are on track for the best week since 2008 on stimulus expectations.
The world's second-largest economy faces strong deflationary pressures due to a sharp property market downturn and frail consumer confidence, which have exposed its over-reliance on exports in an increasingly tense global trade environment.
A wide range of economic data in recent months has missed forecasts, raising concerns among economists that the growth target was at risk and that a longer-term structural slowdown could be in play.
On Friday, data showed industrial profits swinging back to a sharp contraction in August.
"We believe the persistent growth weakness has hit policymakers' pain threshold," Goldman Sachs analysts said in a note.
As flagged on Tuesday by Governor Pan Gongsheng, the People's Bank of China on Friday trimmed the amount of cash that banks must hold as reserves, known as the reserve requirement ratio (RRR), by 50 basis points, the second such reduction this year.
The move is expected to release 1 trillion yuan ($142.5 billion) in liquidity into the banking system and was accompanied by a cut in the benchmark interest rate on seven-day reverse repurchase agreements by 20 bps to 1.50%. The cuts take effect on Friday and Pan, in rare forward-looking remarks, left the door open to another RRR reduction later this year.

Given weak credit demand from households and businesses, investors are more focused on the fiscal measures that are widely expected to be announced in coming days.
Reuters reported on Thursday that 1 trillion yuan due to be raised via special bonds will be used to increase subsidies for a consumer goods replacement program and for the upgrade of large-scale business equipment.
They will also be used to provide a monthly allowance of about 800 yuan, or $114, per child to all households with two or more children, excluding the first child.
China aims to raise another 1 trillion yuan via a separate special sovereign debt issuance to help local governments tackle their debt problems.
Bloomberg News reported on Thursday that China is also considering the injection up to 1 trillion yuan of capital into its biggest state banks.
Most of China's fiscal stimulus still goes into investment, but returns are dwindling and the spending has saddled local governments with $13 trillion in debt.
The looming fiscal measures would mark a slight shift towards stimulating consumption, a direction Beijing has said for more than a decade that it wants to take but has made little progress on.
China's household spending is less than 40% of annual economic output, some 20 percentage points below the global average. Investment, by comparison, is 20 points above but has been fueling much more debt than growth.
The politburo also pledged to stabilize the troubled real estate market, saying the government should expand a white list of housing projects that can receive further financing and revitalize idle land.
The September meeting is not usually a forum for discussing the economy, which suggests growing anxiety among officials.
"The 'shock and awe' strategy could be meant to jumpstart the markets and boost confidence," Nomura analysts said in a note.
"But eventually it is still necessary for Beijing to introduce well thought policies to address many of the deep-rooted problems, particularly regarding how to stabilize the property sector."