Ashurst advised BP p.l.c. on the issue of £400 million cash-settled, non-dilutive convertible bonds. The bonds, which have a seven-year maturity, were issued by BP Capital Markets p.l.c. and guaranteed by BP p.l.c. Concurrently with the issue of the bonds, a subsidiary of BP p.l.c. purchased cash-settled call options on the ordinary shares of BP p.l.c. to hedge the exposure to pay cash amounts under the bonds upon any exercise of conversion rights. The proceeds of the issue of the bonds were used for general corporate purposes and to buy the cash-settled call options.
Barclays, Credit Suisse, Goldman Sachs and Société Générale acted as managers on the issue.
The non-dilutive, cash settled convertible bond structure represents a recent development in the convertible bond market and enables issuers to obtain the pricing benefits normally associated with convertible bonds but without dilution of its share capital.
The Ashurst team was led by finance partners Anna Delgado and Jonathan Haines, assisted by senior associates Alex Biles and James Knight, and associate Rob Dixon. Tax partner Paul Miller advised on the tax aspects of the transaction.
