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Ответы на тесты и решение задач для студентов российских ВУЗов
Ответы на тесты и решение задач для студентов российских ВУЗов
  • Главная
  • Решение задач
    • История зарубежной философии
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Arranging the bond offering underwriters marketing and outcome

Arranging the bond offering: underwriters, marketing and outcome.(a) How do you think did Ras Gas pick the lead underwriters? Why?
Following detailed evaluation of the technical and financial merits of each bid, clarification meetings with the contractors and their banks, and final contract negotiations. Ras Gas awarded the onshore EPC contract to JGC/MW Kellogg and signed a commitment letter with a bank group led by the Industrial Bank of Japan and Credit Suisse. Their financing commitment included participation by export credit agencies from the U.S., the U.K.. and Italy, and, importantly, adhered to the terms and conditions that had been negotiated over the past nine months in the SFCs.
Ras Gas elected to continue with its plans for a capital markets offering and selected Goldman Sachs and CS First Boston as underwriters. Skadden. Arps, Slate, Meagher & Flom, which represented the bank group, was also selected as underwriters’ counsel.
Ras Gas picked the lead underwriters because the incremental work in drafting an offering circular would be moderate because substantial information had been prepared for the banks and ECAs, a financial model already existed, independent expert reports covering construction, gas reserves, the LNG market, condensate, and insurance had already been substantially completed, and documentation would largely piggyback on the bank and ECA process
(b) Analyze the bond marketing strategy. What was the targeted investor base? How was the maturity structure designed? Describe the main marketing themes.
It was possible to market a bond financing for Ras Gas in advance of the closing of the bank and EGA facilities, it was decided that a simultaneous closing was preferable from the standpoint of both logistics and marketing story of the bonds. The bank and EGA facilities were scheduled to close in mid-December, and, therefore, the bond roadshow and marketing were organized for the first two weeks in December. Two separate roadshow teams were dispatched to expedite the marketing process, one focused on the U.S. and the other covering the Middle East and Europe. Since the U.S. market had not been exposed to a Middle East credit, Goldman Sachs began to educate the market on the Qatar sovereign credit in advance of the marketing of the Ras Gas offering. The offering was structured in two tranches. A shorter tranche (ten-year maturity and seven-year average life) amortized concurrently with the bank and ECA loans and was targeted to Middle East and European banks and financial institutions that were unlikely to invest beyond a ten-year maturity. A longer tranche (seventeen-year maturity and fifteen-year average life) amortized after repayment of the bank and ECA loans and was targeted primarily to U.S. institutional investors.
The marketing strategy emphasized that:
Ras Gas represented an important component of Qatar’s national strategy to develop the North Field as its economic foundation for the next century;
Ras Gas represented a key part of Mobil’s development of its LNG business as a cornerstone of the company’s growth strategy;
the increasing utilization of natural gas by residenial, commercial, and industrial end markets in Korea is a national objective tor which billions of dollars are being spent on infrastructure; and
because Ras Gas has the rights to develop at least 10 MMTA from the North Field, the sponsors would be increasing their equity investment over time and building a company with greater resources and a diversified group of Ryers.
The measures need to be implementing were:
1) classifying voting decisions into three criteria (administrative, material, fundamental) that required increasing levels of lender approval,
2) reducing the thresholds required for lenders to pursue remedies as time elapsed following defaults.
The targeted investor base represented a broad cross-section of insurance companies, mutual funds, advisors, and banks in the U.S. as well as a number of foreign buyers. Approximately 80% of demand was from U.S. accounts, with the most significant foreign buying from the Middle East.
(c) What was the outcome of the bond offering? Who bought the issues? How were they priced and what did it Ras Gas help to achieve?
Ras Gas completed a $1.2 billion offering that met all its remaining financing objectives by maximizing funding for a one-train project, reducing overall cost, and accelerating shareholder returns through extended maturities. The Ras Gas bonds were bought by about seventy investors. In addition foreign demand represented a relatively small portion of the overall demand, but was still significant in absolute dollars. Insurance companies, mutual funds, advisors, and banks in the U.S. as well as a number of foreign buyers bought the issues. Although the basic elements of this structure had been accepted by the lenders, it was further tested by the significant uncertainty that remained in the financing (e.g. the purchaser and terms of sale for the second LNG train) and the increased, size of the bond offering. The ECAs, in particular, had initial concerns about the bonds being increased to nearly 50% of the overall financing.
As a result the Ras Gas established a clear financing strategy’s from the start that incorporated a multisource financing. Presentation of the project to key market participants and the development of an active dialogue regarding financing terms was critical to the development of support and momentum for the financing process
Investor Distribution by Type

Bonds Due 2006
Bonds Due 2014

280352577470mutual funds
15%
00mutual funds
15%
2874645724535financial • advisors 32%
00financial • advisors 32%
16814808953500507174553340mutual funds 27%
00mutual funds 27%
35934650005146040115697038%
0038%

660400198755pension funds • 5%
00pension funds • 5%

525208552070financial
advisors
00financial
advisors

The following table illustrates the Ras Gas ONE-TRAIN FINANCING
Uses ofSources of
Funds ($ millions) Funds (S millions)
Capital Cost $2,210 Bonds $1,200
Finance &

Interest During

Construction 280 Equity 1,290
Total Project Total Project
Cost $2,490 Cost $2,490
Panel B. Ras Gas Two-Train Financing
Uses of Sources of
Funds ($ millions) Funds ($ millions)
Capital Cost $2,750 Bonds $1,200
Finance N

Interest During Banks/ECAs 1,350
Construction 650 Equity 800
Total Project Total Project
Cost $3,400 Cost $3,400

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