ADNOC Commits To Cash Settlement For Exchangeable Bonds Due In 2024

Abu Dhabi National Oil Company (ADNOC) has made a significant announcement regarding its financial strategy, specifically concerning its US Dollar-denominated senior unsecured bonds. These bonds, known as Exchangeable Bonds, are set to mature on 4th June 2024. ADNOC has committed to fulfilling its financial obligations by opting for a cash settlement approach, which involves a substantial payment amounting to up to $1.195 billion, in addition to up to $4.18 million in applicable interest.

The inception of these Exchangeable Bonds dates back to May 2021, when ADNOC issued them alongside an offering of approximately 375 million shares in ADNOC Distribution. It's noteworthy that the option for settling these bonds through share conversion will cease on 4th May 2024. By choosing a cash settlement, ADNOC will retain ownership of the underlying shares, which represent about 7% of the registered share capital of ADNOC Distribution. This strategic move ensures that ADNOC Distribution’s free float remains unchanged at 23% following the redemption of the Exchangeable Bonds.

As a principal shareholder in ADNOC Distribution, ADNOC's decision underscores its enduring commitment to the company. This is further evidenced by its full support for ADNOC Distribution’s recently unveiled new mid-term growth strategy. ADNOC’s leadership believes that this strategy will not only bolster the company's growth but also generate additional value for all stakeholders involved.

In essence, ADNOC’s approach to managing its Exchangeable Bonds reflects a broader strategy of maintaining a stable shareholding level in ADNOC Distribution post-maturity. This decision aligns with its long-term vision and commitment to fostering sustainable growth and value creation within its subsidiary and for its stakeholders.

With inputs from WAM