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New Enquest Retail Bond 9% Due 2027

Gilts, bonds, and interest-bearing shares
ACthelimefool
Posts: 6
Joined: February 17th, 2021, 8:29 am

Re: New Enquest Retail Bond 9% Due 2027

#498325

Postby ACthelimefool » May 4th, 2022, 8:55 am

Morning, I am chasing this up with AJ Bell at the moment, having had no sight of the 9's, the accrued coupon or the exchange payment, nor any sight of any update/correspondence explaining any delay to the whole process which is the most disappointing element.

ACthelimefool
Posts: 6
Joined: February 17th, 2021, 8:29 am

Re: New Enquest Retail Bond 9% Due 2027

#498339

Postby ACthelimefool » May 4th, 2022, 9:39 am

And the wait is over, all bonds and associated cash added to my accounts within the last 30 minutes. :D

Wozzitworthit
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Re: New Enquest Retail Bond 9% Due 2027

#498352

Postby Wozzitworthit » May 4th, 2022, 10:30 am

Same with HL - fees and credits now received in all our relevant accounts

geoffp
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Re: New Enquest Retail Bond 9% Due 2027

#498362

Postby geoffp » May 4th, 2022, 10:48 am

No reply yet from Interactive Investor but the 9%s have appeared in place of my 7%s and an exchange payment has been made amounting to a fraction over 1.5% plus 71 days interest (actual percentage paid 2.8729 compared with my calculated 2.8616).

hiriskpaul
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Re: New Enquest Retail Bond 9% Due 2027

#498411

Postby hiriskpaul » May 4th, 2022, 12:41 pm

HL Online buy/sell quotes for 10k nominal 100.6/101.466. Together with the 1.5% fee this has worked out well so far. My view now is that we will not see much change until the rest of the debt, the so called High Yield Notes, have been restructured.

I am tempted to sell a few to reduce the risk, but torn as I think they are a good investment at the current price, assuming the rest of the debt is satisfactorily dealt with.

Seasider
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Re: New Enquest Retail Bond 9% Due 2027

#498526

Postby Seasider » May 4th, 2022, 8:29 pm

In my HL account the exchange fee is called a return of capital which got me thinking about CGT. Am I right to think that as ENQ1 is a qualifying corporate bond the fee is free of CGT? I confess that in the past I have treated things like the voting fee paid on ERO1 last year as subject to CGT.

88V8
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Re: New Enquest Retail Bond 9% Due 2027

#500212

Postby 88V8 » May 13th, 2022, 10:13 am

The 9s and the 7s have almost the same screen price.
Which is bonkers. Haven't tried to get a real price as I have no more 7s.

One almost wonders whether they could have issued more 7s but without the PIK.
Who told them they had to offer a 9% coupon?

Slow Friday musings...

V8

Gan020
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Re: New Enquest Retail Bond 9% Due 2027

#500219

Postby Gan020 » May 13th, 2022, 10:32 am

88V8 wrote:The 9s and the 7s have almost the same screen price.
Which is bonkers. Haven't tried to get a real price as I have no more 7s.

One almost wonders whether they could have issued more 7s but without the PIK.
Who told them they had to offer a 9% coupon?

Slow Friday musings...

V8


The 7's redeem in about Oct 23 and rank in the stack before the 9's which redeem in 27 unless called early.
The yield is going to be lower on the issue which redeems first.

If interest rates go to 2.5% by the summer of next year and if they had left it until then to refinance the coupon might have been nearer 10%.

I guess we pay our money and take our chance. The market will be worried about a labour government and windfall taxes if we look as far out as 2027. Plus depletion of ENQ resources and what price they might have to pay to replace them at.

Hallucigenia
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Re: New Enquest Retail Bond 9% Due 2027

#519832

Postby Hallucigenia » August 4th, 2022, 3:13 pm

hiriskpaul wrote:I don't want as big an exposure to a small highly indebted oil company for something maturing in 5 years, even if it does come with a 9% coupon.

Gan020 wrote:The 7's redeem in about Oct 23 and rank in the stack before the 9's which redeem in 27 unless called early.
The yield is going to be lower on the issue which redeems first.

If interest rates go to 2.5% by the summer of next year and if they had left it until then to refinance the coupon might have been nearer 10%.

I guess we pay our money and take our chance. The market will be worried about a labour government and windfall taxes if we look as far out as 2027. Plus depletion of ENQ resources and what price they might have to pay to replace them at.


For those that missed it, they had quite a bit to say about their debt position in their recent trading statement, they are rapidly becoming a rather less highly indebted oil company....

§ Net debt of c.$880 million at 30 June 2022 is down c.$342 million, inclusive of c.$10 million of foreign exchange movement, from 31 December 2021, driven by strong free cash flow generation
§ At the end of June, $115 million remained outstanding on the Group's senior secured debt facility ('RBL') following accelerated repayments totalling $300 million in the six months to end June 2022
§ EnQuest's net debt to EBITDA ratio as at 30 June 2022 is around 1.0x, down from 1.6x at the end of 2021.
In line with EnQuest's continued focus on deleveraging, during July, the Group has bought back and cancelled $14.4 million of its 2023 7% high yield bonds, leaving $813 million outstanding.
The Group continues to explore options to refinance its high yield bond ahead of maturity in October 2023.
§ For the period July to December 2022, the Group has hedged c.3.4 MMbbls of oil with an average floor price of c.$60/bbl and an average ceiling price of $79/bbl. For 2023, the Group has hedged a total of approximately c.3.5 MMbbls with an average floor price of c.$57/bbl and an average ceiling price of c.$77/bbl


Per their May update :
On 20 April 2022, EnQuest completed an exchange and cash offer to partially refinance its October 2023 7% GBP retail bond with an October 2027 9% GBP retail bond. The 9% bond attracted £54.0 million through the cash offer and £79.3 million through the exchange offer, which together resulted in a principal issue of £133.3 million. The exchange offer has resulted in £111.3 million of the October 2023 7% bond remaining in issue.

So they've been paying down debt at $57m per month this year, in which time they've gone from 1.6x adjusted EBITDA to 1.0x, against a target of 0.5x. All things being equal (which they never are) then they would pay off their reserves-based lending (RBL) by the end of this month. That's always a good one to get rid of as RBLs generally come with fairly stringent conditions from the banks on hedging etc. You can see that in the fact that at the results in March they had 8.6 million barrels hedged as collars at $63/$78, and as of the other day they had 6.9 million barrels at $57-60/$78-ish. In 2021 their hedging deprived them of $122m of income, and this year hedging has already cost them $142m so far.

Again all things being equal, 0.5x would imply they would be comfortable with a long-term debt of around $450m and at current rates they would get there by the end of February 2023. It won't work out like that inevitably, but it gives an idea of the timescales. And ~$160m of that has already been moved out to 2027 by you lot taking the 9% so potentially they're only looking at refinancing $300m or so of the corporate version of the 2023 7% by October 2023.

I wouldn't be so worried about depletion as they're in a reasonably good place from that POV - they did their deals before the oil price shot up, which has given them projects like Bentley to work on (and hence have lots of windfall offsets, although they have $3bn of tax losses already).


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