3 Mar 2010 18:36

Alliance Oil reopens bid book for 5-yr LPN, guidance 10%

MOSCOW. March 3 (Interfax) - Alliance Oil has reopened the investor bid book for its five-year loan participation notes (LPN), a banking industry source told Interfax.

The placement organizers are BNP Paribas, Credit Suisse, and JP Morgan. A pricing announcement is expected sometime later this week.

A banking industry source told Interfax later on Wednesday that yield guidance on the notes was around 10% p.a.

Alliance Oil last week decided not to proceed with a dollar-denominated Eurobond placement owing to unfavorable market trends. It was thought the company would place five-year Eurobonds worth approximately $500 million. Although official guidance was not set, market participants forecast it at 9.5%-10%. The company wanted to place at less than 10%.

Unofficial reports then said the company was planning to offer up to 10 billion rubles in local-currency bonds and that Raiffeisenbank and Renaissance Capital would arrange these, however the latter have declined to comment.

Alliance Oil planned to use the Eurobond proceeds to pay off or restructure loans and for operating purposes.

In July of 2009, the company placed $265 million in five-year convertible Eurobonds on the Luxemburg Stock Exchange. The funds were earmarked to reduce short-term term debt ($569.4 million at the end of the first quarter of 2009), as well as for organic growth and possible acquisitions.

Alliance Oil was formed in 2008 from the merger of Alliance Oil Company and West Siberian Resources. The company explores and produces hydrocarbons in the Republic of Komi, the Tomsk and Volga-Urals regions, and Kazakhstan. It also controls Khabarovsk Oil Refinery and has a large retail chain in Russia's Far East.

The Alliance Group owns 53.7% of Alliance Oil Company, SIX SIS AG - 5.1% and Repsol - 3.4%.