Melrose postpones €250 million note offering, cites market conditions

By Paul A. Harris

St. Louis, Nov. 2 - Melrose Resources plc postponed its planned €250 million offering of eight-year senior subordinated notes (CCC+) because of market conditions, according to a Friday press release.

The notes had been talked at 10% to 10¼%; however, according to market sources, the deal was generating very little investor interest at those levels.

Merrill Lynch & Co. was the bookrunner for what had been expected to be the first issue of high-yield bonds from a European issuer since the mid-summer sell-off in the international credit markets.

Proceeds were to be used to refinance debt and provide working capital for the company's projected exploration and development program.

Commenting on the postponed deal, Melrose Resources CEO David Thomas stated in the Friday press release "The bond issue was driven by a desire to consolidate Melrose's long term financial arrangements and, since our current financial position is strong, it would not make sense for us to issue the notes under current market conditions.

"We will proceed with the company's active exploration and development program using our existing financing facilities, which are more than adequate to cover our investment requirements."

Melrose Resources is an Edinburgh, England-based oil and gas exploration and development company.

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