Sable Offshore's 15% Term Loan Struggles to Draw Investors

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JPMorgan Chase is still working to secure investor commitments for a $775 million term loan backing Sable Offshore, even though the debt carries a hefty 15% fixed interest rate. The offering remained in the market on Monday after investment commitments had originally been due Friday, according to people familiar with the matter. The weaker demand stands out in a leveraged-loan market that has generally seen strong appetite. Sable had first sought to raise $1 billion through the term loan, but the deal was later reduced by $225 million amid sluggish demand. The Houston-based oil driller continues to face legal challenges over its right to operate in California, having resumed oil drilling in March after more than a decade of inactivity. The proceeds, along with an unsecured capital markets raise, are intended to refinance a term loan from Exxon Mobil that had been set to mature on June 26; Sable agreed last week to pay Exxon $30 million to extend the due date to July 24, with the extension now expected to run through the end of July. The proposed loan is being offered at 97 cents on the dollar, carries a rare two-and-a-half-year maturity, and includes repayment requirements that could possibly reduce default risk over time.