Incitec Pivot taps US debt markets

Explosives maker Incitec Pivot has raised $US400 million ($500 million) from mainly Asian investors, as it looks to strengthen its balance sheet and lift shareholder returns.

The raising is notable for the fact Incitec tapped the Regulation S bond market, which allows companies to raise US dollar debt outside of the traditional bond market, with a lower compliance burden.

Incitec chief financial officer Frank Micallef said from the United States that 95 per cent of the debt was raised from investors in Hong Kong and Singapore.

He said the investors, who regularly support Chinese corporations, appeared please to be able to back an Australian mid-sized industrial group. The offer was eight times over-subscribed. 

“They were seeing investing in a company like us as a great opportunity to diversify their portfolio,” he said.

Mr Micallef said the debt raised would not increase Incitec’s overall borrowings, and would instead be used to retire short-term debt.

“It’s strengthening the debt book so the balance sheet is really solid and we can continue with out strategy.”

The company is entering a period of consolidation following the completion of its new ammonia plant in Louisiana, and has committed to lifting returns to shareholders.

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