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Tullow Oil makes $750m cash call to reduce debt

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LONDON: Britain’s Tullow Oil Plc plans a rights issue to raise about £6607 million to cut its $4.8 billion debt burden and make investments in drilling and exploration in Latin America and Africa.


Tullow, whose founder and long-serving chief executive Aidan Heavey will hand over to Chief Operating Officer Paul McDade in April, was hit hard by the collapse in oil prices in 2014 just as it was investing heavily in an oil project off Ghana.


Under the terms of the 25 for 49 rights issue, Tullow said on Friday it will issue 466.9 million shares at 130 pence each, a 45.2 per cent discount to Thursday’s close.


Some analysts said they were surprised by the move and Tullow’s shares were down 13.7 per cent at 204.9 pence at 0833 GMT.


“The... rights issue comes as a surprise to us and possibly indicates banks were not as supportive to RBL refinancing as we were expecting,” Jefferies analyst Mark Wilson said.


Tullow, which had tightened its investment budget to $500 million this year, from $900 million in 2016, had net debt of about $4.8 billion as of December 31. — Reuters


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