Renaissance Services SAOG, Omani-based multinational oil and gas services provider, has announced that its recent issue of subordinated loan notes of Rial 40 million (US$ 104 million) to Omani investors has been fully subscribed in the largest mezzanine financing offer by a non-banking company in the sultanate to date.
Mezzanine financing is a unique and advantageous form of tier II funding capital that is treated like equity and offers an opportunity to enhance return for investors and the company's shareholders. BankMuscat, Oman's leading financial services provider, structured and supervised the capital raise in its capacity as Transaction Structuring Advisor to the investors in the loan notes. The full subscription of the subordinated loan notes signals strong investor confidence in the company's business model, future outlook and nine-year consecutive record growth track through booms and busts of economic cycles.
"This is the company's first exposure with this form of long-term mezzanine financing which perfectly matches with the long-term growth objectives and long-term nature of the company's solid assets base, and BankMuscat played an important role in the successful closure of this transaction by recognizing the intrinsic strength of various businesses of the company," said Vishal Goenka, Chief Financial Officer at Renaissance Services. "This funding has many first to its credit, mezzanine loan notes have been issued for the first time by a non-banking corporate to Omani investors at such a scale and are fully subscribed at a price attractive to both the investors and the company, and this should further promote the market in Oman. Specifically, this funding will help us to reduce the overall cost of capital employed and will extend the company's ability to fund anticipated growth."
Renaissance has set in motion its growth plans to invest Rial 522 million (US$ 1.36 billion) over the three year period 2010-2012 in assets corresponding to its growth areas in marine offshore, engineering and contract services businesses owned by the company. In the first nine months of 2010, Renaissance invested over Rial 96 million (US$ 250 million), primarily to expand the company's world class offshore support vessels fleet which is one of the youngest fleets in the world and ranks amongst the top ten globally.
Assets in the company's balance sheet stand at over Rial 500 million (US$ 1.3 billion) and are expected to grow significantly over the next three years with the investment program. Goenka added, "Under the advice of some of the best advisors in their respective fields, we are investigating various investment strategies and capital raise plans, based on the clear visibility and upcoming opportunities in each business segment."