The Oman Electricity Transmission Company has a plan to issue around OR300 million ($780 million) in bonds as part of a recapitalisation of the government-owned transmission operator.
Oman’s government thinks through the apparent potentialities for a privatisation of its power transmission and distribution assets. For this reason the recapitalisation came to existence.
Bank Muscat and JP Morgan are understood to be bookrunners for the bonds, and are holding investor meetings in the US and Europe. Moody’s has assigned an A3 rating to issuer Lamaar Funding, which will benefit from a guarantee from Oman Electricity Transmission (OETC).
The Electricity Holding Company (EHC), a government-owned entity, owns OETC and the Oman Power & Water Procurement Company, the offtaker for the country’s self-governing power projects, among other assets.
It also possesses Muscat Electricity Distribution Company (MEDC), and recently retained CPCS Transcom to study a potential privatisation of MEDC.
EHC has also expected privatising OETC since before 2009, when it put those plans on hold. The recapitalisation is planned to permit OETC to run at a greater distance from its administration owner.
EHC will alter a holding company loan of OR133 million into equity. At the same time the proceeds of the bonds will go towards paying down another OR233 million in short-term debts, and fund part of an estimated OR540 million capital expenditure programme that will take place up to 2019.
Moody’s adds that EHC will use the profits of a conventional divided policy for its subsidiaries to build up a OR120 million reserve that can be used to back its subsidiaries’s financial obligations.
Oman’s Ministry of Finance guarantees that EHC and its subsidiaries are competent to increase adequate funding, for as long as the government is majority owner.