Around 375 million shares offered in ADNOC distribution

Abu Dhabi National Oil Company (ADNOC) together with its subsidiaries, the ADNOC Group, the current holder of 80 percent of the common shares in Abu Dhabi National Oil Company for Distribution PJSC, announced its intention to offer approximately 375 million shares.

Around 375 million shares offered in ADNOC distribution

The shares correspond to approximately three percent of the registered share capital of ADNOC Distribution (the Share Offering), through an accelerated book-build offering at an offer price of AED4.36 per share to certain eligible institutional investors in reliance on Rule 144A and Regulation S of the U.S. Securities Act of 1933, as amended (the U.S. Securities Act).

Concurrently with the Share Offering, ADNOC proposes to issue approximately US$1.195 billion senior unsecured bonds due in 2024 that are exchangeable into existing common shares of ADNOC Distribution, constituting approximately seven percent of the company’s registered share capital under certain conditions (the "Exchangeable Bonds"), under a private placement to certain eligible investors outside the United States under Regulation S under the U.S. Securities Act (the "Exchangeable Bond Offering" and, together with the Share Offering, the "Combined Offering"). The Combined Offering will not be available to the public in the UAE or any other jurisdiction.

Together, the Share Offering and, assuming exchange and settlement in shares of all of the Exchangeable Bonds under their terms, the Exchangeable Bond Offering, represent a Combined Offering by ADNOC of approximately 10 percent of the registered share capital of ADNOC Distribution. The blended price of the Combined Offering of AED4.82 is approximately five percent above the three-month volume-weighted average share price of ADNOC Distribution.

The Exchangeable Bond Offering will have a maturity of three years and will be issued at an issue price of 100 percent with a coupon of 0.70 percent per annum, payable semi-annually as arrears in June and December each year. The exchange premium will be 15 percent above the reference price of ADNOC Distribution shares, resulting in an exchange price of AED5.01.

The transaction is the first combined equity and exchangeable bond offering in the GCC, once again highlighting ADNOC’s novel approach to unlocking value from its assets. The innovative deal structure and attractive form of financing provides ADNOC with greater access to a new and broader investor base, including those that are interested in an equity-linked bond investment. The terms of the Exchangeable Bonds also provide an opportunity for the monetization of ADNOC Distribution shares at a premium to the price of the Share Offering.

The sale supports ADNOC’s commitment to increase the free float in ADNOC Distribution following the company’s Initial Public Offering ("IPO") in December 2017. Morgan Stanley Capital International ("MSCI") announced on 11th May, 2021, that ADNOC Distribution has been included as part of the MSCI Emerging Markets Index, effective 27th May, 2021. The company will be one of only nine UAE publicly listed companies to be part of the index.

The final terms of the Combined Offering are expected to be announced following the completion of the book-building process for the Combined Offering. Settlement of the Share Offering is expected to occur on or about 31st May, 2021, and settlement of the Exchangeable Bond Offering is expected to occur on or about 4th June, 2021.

ADNOC has agreed to a lock-up period of 90 calendar days from the settlement date under the terms of both the Share Offering and Exchangeable Bond Offering. An application is expected to be made for admission of the Exchangeable Bonds for listing and trading on the Vienna MTF, an exchange-regulated market operated by the Vienna Stock Exchange.

Dr. Sultan bin Ahmed Al Jaber, Minister of Industry and Advanced Technology and Managing Director and ADNOC Group CEO of ADNOC, said, "At the time of ADNOC Distribution’s IPO, ADNOC conveyed its intention to sell additional ADNOC Distribution shares at the appropriate time, to increase liquidity and access to an attractive investment opportunity. Today’s announcement follows the placement of 10 percent of the outstanding share capital in September 2020 and represents the first combined equity and exchangeable bond offering in the GCC.

"Assuming all the Exchangeable Bonds are exchanged and settled in shares, the transaction will increase the free float in ADNOC Distribution to 30 percent, with ADNOC retaining a 70 percent strategic stake in the company, as we continue to see significant growth potential. The transaction also marks a further milestone in our value creation strategy, enabling ADNOC to unlock significant value from its assets."

Since its IPO, ADNOC Distribution has continued to deliver on its growth ambitions, introduced a range of new customer-orientated services and enhanced its dividend policy. Citigroup Global Markets Limited and First Abu Dhabi Bank PJSC are acting as the Joint Global Coordinators and Joint Bookrunners for the Share Offering. Citigroup Global Markets Limited is acting as the Global Coordinator and Bookrunner, with Abu Dhabi Commercial Bank PJSC and First Abu Dhabi Bank PJSC acting as Co-Bookrunners, for the Exchangeable Bond Offering (collectively, the "Banks").
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