Total to Raise $1.2 Billion Through "Synthetic Bond Financing"

France-headquartered Total said on Wednesday it will raise new debt financing for “general corporate purposes.” 

"Total is raising approximately $1.2 billion [USD] of new debt financing through a structure combining the issue of non-dilutive cash-settled convertible bonds with the purchase of cash-settled call options to hedge Total's exposure to the exercise of the conversion rights under the bonds," Total wrote in a statement.  

The 7-year bonds will be offered only to institutional investors outside the United States, Australia, Canada and Japan.

According to the company, the combination of bonds and call options will create a financing scheme equivalent to a standard debt instrument with no dilution for shareholders.

Earlier this month, Total’s CEO Patrick Pouyanné said that oil majors can reap the benefits of the current market conditions, adding that companies have to be patient and wait for the right moment to buy assets. 

In September, Total announced its intention to reduce capital expenditures to $23-24 billion in 2015, from a peak of $28 billion in 2013, adding that it will further reduce investment down to $20-21 billion in 2016, before returning to a sustainable level of $17-19 billion from 2017 onwards.