On 6 July 2016, Tullow Oil plc announced it was launching a US$300 million convertible bond offering – reopening a capital market which has been effectively closed to London-listed E&Ps for a number of years.
One of the most fascinating aspects of the deal was not the metrics – it was in Tullow’s comments stating that its focus would continue to be on “strengthening the balance sheet and deleveraging the business”. This begs the question; is a convertible bond equity or is it debt?!
With +US$2.7 billion of convertible bonds issued by London-listed E&P companies since 2006, we look at just how many have actually converted to equity – and the implications that can have on anyone considering one in the future.