Market speculation on the debt position of Origin Energy has seen the company move to publicly clarify what the falling oil price means for shareholders and hybrid noteholders. Origin note holders are expecting the company to redeem the hybrids for $100 at the first call date in December 2016.
Most energy companies are under pressure from collapsing oil prices but Origin in statement said:
- The “company has in excess of $6.5 billion of committed undrawn debt facilities”
- It has “no material refinancing requirements until FY2019”
- “Earnings from existing businesses have minimal exposure to oil price”
- “Cash flow from the existing businesses without any distributions from Australia Pacific LNG is expected to be sufficient to service all interest and dividend payments”
- If “oil prices fall to US$20/bbl for the entire 2017 financial year, with the benefit of the oil put, the additional net contribution that Origin would have to make to Australia Pacific LNG is expected to be around $200 million”
Origin note holders have been on a wild ride over the past few months with some big swings in prices. Yield to maturity on Friday was well over 10.00%.