Ampol Secures A$600 Million in Subordinated Notes to Boost Financial Flexibility and Future Growth

About Ampol Limited

Ampol Limited (Ampol, the Company, ASX: ALD) engages in the supply of transport fuels and offers an array of business services, including fuel cards, lubricants, and oil finder tools. The Company operates through four key segments: Fuels and Infrastructure, Convenience Retail, Z Energy, and Corporate. Its Fuels and Infrastructure division oversees refining, bulk fuel sales, trading, shipping, and future energy projects. The Convenience Retail segment focuses on fuel and shop offerings across Ampol’s Australian network. Meanwhile, the Z Energy segment operates within the New Zealand market, and the Corporate segment handles head office functions such as finance, HR, IT, and legal operations. Founded in 1918, Ampol has a rich history, beginning as the Australian operator for The Texas Company. Today, it is headquartered in New South Wales, Australia, and continues to innovate within the energy sector.

Securing Long-Term Capital for Financial Flexibility

Ampol has achieved a significant milestone by successfully pricing A$600 million in subordinated notes in the domestic fixed-income market. This issuance, with a maturity of 2054, forms a key pillar in Ampol’s capital management strategy. The proceeds from the offering will be used to refinance upcoming debt maturities and support general corporate activities as outlined in the Company’s Capital Allocation Framework. By securing this long-term source of capital, the Company aims to enhance its financial flexibility and fortify its position in an evolving energy market.

The terms of the subordinated notes are particularly appealing to wholesale investors. They offer a 30-year maturity with quarterly interest payments linked to the 3-month Bank Bill Swap Rate plus a margin of 2.50%. Ampol also retains the right to defer interest payments for up to five years, reflecting prudent risk management. The subordinated nature of the notes ensures they rank below senior debt but equally with existing subordinated notes, strengthening the Company’s capital structure and investor confidence.

Strong Investor Support Reflects Market Confidence

The success of the issuance is underscored by the strong support ALD received from both new and existing investors. Greg Barnes, Ampol’s Group Chief Financial Officer, emphasised the positive response, noting that the transaction builds on the Company’s successful 2022 subordinated note issuance. This reinforces Ampol’s reputation as a trusted entity in the capital markets. The backing from investors highlights their confidence in Ampol’s strategic direction and financial resilience, particularly during a period of increasing competition and market volatility.

In addition, Moody’s Investors Service has granted the notes 50% equity credit, validating their strategic significance in maintaining a robust credit profile. This equity credit not only strengthens ALD’s balance sheet but also ensures that the Company retains its financial flexibility to pursue future opportunities. The positive market response positions ALD as a leader in innovative financing solutions, further bolstering its reputation in the energy and infrastructure sectors.

Aligning Capital Management with Strategic Objectives

This issuance aligns seamlessly with Ampol’s broader strategic goals, ensuring its financial mechanisms support its long-term operational ambitions. A notable aspect of this strategy is the planned amendments to terms for its existing subordinated notes, which will align them with the new issuance. These changes include enhanced deferral rights and more defined subordination structures, ensuring consistency across ALD’s capital instruments. By adopting these measures, ALD continues to demonstrate a proactive approach to financial management, focusing on stability and investor confidence.

The funds raised through the subordinated notes will also contribute to Ampol’s growth initiatives. As the energy market undergoes significant transformations with a shift towards sustainability, Ampol is well-positioned to adapt and thrive. This capital raising effort allows the Company to navigate the evolving landscape while maintaining a steady focus on delivering value to its shareholders.

Proactive Financial Planning for Future Growth

Looking ahead, the successful settlement of the A$600 million subordinated notes, anticipated on 11 December 2024, solidifies Ampol’s foundation for sustainable growth. The Company’s proactive financial planning ensures it remains resilient amidst industry challenges while creating opportunities for long-term value creation. By diversifying its funding sources and aligning them with strategic objectives, ALD secures its competitive edge in a dynamic energy market.

This issuance is more than a financial transaction; it signifies ALD’s commitment to sustainability and innovation. By leveraging innovative financial solutions, ALD demonstrates its ability to stay ahead of market demands and meet the expectations of its stakeholders. The Company’s adaptability, rooted in over a century of history, ensures it remains a key player in Australia’s energy sector and beyond.