Seadrill seeks consents to amend 12% notes, plans contingent tender

By Sarah Lizee

Olympia, Wash., Feb. 22 – Seadrill Ltd. began a consent solicitation for its outstanding 12% senior secured notes due 2025, according to a press release.

The company said it is seeking to amend some terms of the indenture and the escrow agreement related to the notes.

Contingent on the successful completion of the consent solicitation, the company also plans to launch a $340 million tender offer at a price of 107 plus accrued and unpaid interest shortly after.

The proposed amendments would permit the use of asset sale proceeds remaining after a mandatory asset sale repurchase offer for open market purchases of the notes.

The amendments would also permit $340 million currently held as security for the notes to fund the tender offer. The amount is comprised of $292 million of restricted cash and $48 million in unrestricted cash on the balance sheet.

Also, the amendments would revise the restriction in the subordinated capital redemption provision that requires a certain principal amount of notes to be outstanding following a redemption of the notes using permissible proceeds.

Additionally, subject to amendments to the documents relating to our secured credit facilities, the amendments would permit the use of unrestricted cash not provided as security for the notes to redeem the notes under the subordinated capital redemption provision under some circumstances. Seeking amendments to the company’s secured credit facilities is not currently contemplated.

The amendments would also eliminate the requirement for obtaining a public rating on the notes.

The consent solicitation will expire at 5 p.m. ET on March 8.

Only holders of notes as of 5 p.m. ET on Feb. 21 who validly deliver and do not validly revoke their consents prior to the expiration time will receive a consent fee equal to $2.50 per $1,000 in principal amount of notes.

Consents may not be revoked after the proposed amendments are completed.

The required majority of noteholders representing greater than 50% of the principal amount outstanding have agreed to consent to the proposed amendments, Seadrill said.

These majority noteholders have also agreed to tender all of their notes, ensuring full take up of the tender cap.

All holders who participate in the tender offer will be subject to proration of their notes actually accepted for purchase, because the purchase will be subject to the tender cap.

D.F. King & Co., Inc. (212 269-5550 for bankers and brokers; 866 796-7184 for all others) will act as the information and tabulation agent for the consent solicitation.

The company is an Oslo-based provider of offshore drilling services to the oil and gas industry.

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