Pacific Drilling buys back $36.9 million notes at a discount in Q3

New York, Nov. 8 – Pacific Drilling SA bought back $36.9 million of its 7¼% senior secured notes due 2017 at a discount during the third quarter, according to a news release.

With the latest repurchases, the company has bought back $60.6 million principal amount of the notes so far this year and recorded a gain on debt extinguishment of $36.2 million.

Pacific Drilling added that it amended the indenture for the notes to allow it to incur additional debt through a consent solicitation. Using that flexibility, the company drew down the remaining $215 million of availability on its revolving credit facility after the end of the third quarter.

“Market conditions continue to be challenging,” the company said in the news release.

As a result, Pacific Drilling is seeking to amend or waive the leverage ratio covenants in its revolving credit facility and senior secured credit facility as it expects to violate those covenants in the next 12 months.

In addition, the company is talking to some lenders and noteholders about further modifications to its long-term debt.

It expects to be able to meet its obligations during 2017, but without a “significant improvement in market conditions in the near term” it will need changes to the terms of its debt in order to be able to sustain its capital structure for a longer period.

Pacific Drilling is a Houston-based contractor providing floating drilling rigs to the oil and gas industry.

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