(Bloomberg) – Abu Dhabi National Oil Co. is considering lining up more than $10 billion in debt financing from local and international banks as it moves forward with its roughly $19 billion pursuit of Australian fossil fuel producer Santos Ltd., according to people familiar with the matter.
The debt package is led by JPMorgan Chase & Co., which is also the financial adviser to the ADNOC-led group, the people said, asking not to be identified because the process is private. Discussions between ADNOC and Santos are progressing as they seek to reach a binding agreement by Sept. 19, when the exclusivity period expires, the people said.
ADNOC’s investment arm XRG PJSC is leading a consortium that includes Abu Dhabi Development Holding Co. and Carlyle Group Inc., seeking to buy Santos for $18.7 billion. The takeover, announced in June, would allow ADNOC to join peers including Saudi Aramco in targeting LNG, one of the fastest-growing fossil fuel markets.
The group is working on due diligence, internal approvals as well as engaging regulators to help clear the path to approval, the people said. Considerations are ongoing and no final decisions have been made, they said, adding that details such as the final size of the financing could still change.
Representatives for the XRG-led consortium and JPMorgan declined to comment, while Adelaide-based Santos didn’t immediately respond to requests seeking comment outside of regular business hours.
Santos extended the exclusivity period for a second time last month, saying the consortium had requested more time to conclude due diligence and obtain approvals to enter into a binding transaction. Santos also reported earnings that beat expectations in August.
Santos Chief Executive Officer Kevin Gallagher has rebuffed several approaches from peers over the last few years, leading to criticism from impatient investors. The board of Australia’s second-largest fossil fuel producer has recommended ADNOC’s cash offer of $5.76 per share.
Santos shares slipped 0.6% to close at A$7.80 Friday. They’re up about 17% this year, valuing the company at A$25.3 billion ($16.6 billion).
