Second green bond, rig sale resurfaces

The company is issuing a €2m green bond and is separating the conventional and renewable activities. The latter was already announced early last year, yet it seems that the improving environment in oil & gas explains this restart. The stock is up 15%, after a volatile November, and, in our view, due to the company issuing the €2m bond instead of using the OCABSA line.

Facts

  • Legal separation of the oil & gas activities and renewables activities
  • Issuance of a €2m green bond:
    • 2-year maturity, repayable monthly, annual coupon 12% payable monthly
    • Conversion price €0.50 per share (from July 2022 to November 2023)

Our analysis

On the separation of the two businesses, we do not believe this will lead to an independent listing of the renewables business. All in all, there seems to be limited interactions between the audit & inspection division and the renewables one, hence the split should have no consequences on the business.

The separation was announced in March 2020, and it may have been on hold during the challenging 2020. Yet, the improving environment in oil & gas, as highlighted by the recovery witnessed in H1, justifies the restart of this process. As further evidence of the latter, a potential sale of the Rig Sedlar resurfaces. As a reminder, the rig was built in 2007 and written down to zero in 2019.

On the €2m bond issuance, beside the conversion price, the financial terms are similar to the first one issued early this year. Conversion of the bod would lead to the creation of 4 million shares.

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