Links
Buying Shares – Seadrill and Golar LNG Buyback Shares
The Fredriksen companies have been busy buying shares lately as a result of certain triggering events. In the case of Seadrill, the parity value of the five year convertible bond issue due in 2012 exceeded 130% of par value for at least 20 days out of a period of 30 consecutive trading days allowing Seadrill to redeem the bond at par plus accrued interest. This, in turn, will likely result in the bondholders exercising their conversion rights. Of the original $1 billion, there is $749.5 million in bonds outstanding. Should all the bondholders convert all the remaining bonds at the $27.80 conversion price (Wednesday’s closing price was $33.59, making the exercise a no brainer), Seadrill will have to issue approximately 27 million new shares. In order to reduce the total outstanding number of shares, Seadrill began to repurchase shares and has since acquired 1.65 million shares at an average price of NOK 184.11 bringing its holdings of treasury shares to approximately 1.8 million.
John Fredriksen as Investment Banker – Norwegian Bond Offering
As part of the capitalization of North Atlantic Drilling, the company issued to Seadrill a $500 million 7-year bond with a coupon of 7.75%, which was structured utilizing the standard Norsk Tillitsman terms. It, therefore, should then come as no surprise that in announcing the closing of the acquisition by NADL, Seadrill also declared that it intends to resell the bond in the market.
Expanding Offshore – SFL Diversifies Its Rig Portfolio
All of Norway, including its major shareholder, is doing it so why not Ship Finance International. What is it that they are all doing? Quite simply, everyone has caught the offshore bug and is expanding their investments in that sector. And, why shouldn’t they. Oil is approaching the magical $100/barrel.
A Specialist Investment Banking Model for Sourcing Capital and Giving Advice – Pareto Carves Out a Niche and Creates a Gateway in New York
For Pareto, it all starts with what you know and being Norwegian they are experts on industries such as shipping, oil services and E&P. In fact, their knowledge starts at the grassroots level through company and industry research and extends to asset brokerage for both ships and offshore drilling rigs. They know the players, understand industries and have global access to market intelligence. These factors together with a focused investment banking team and dedicated institutional sales force, both equity and fixed income, underlie their strength in deal origination and execution. As they say, they are “in the market” which is evidenced by three very different recent transactions. They played an important role in the Vantage Drilling bond and equity offerings and are advising Rowan on its acquisition of Skeie Drilling.
Continue Reading
Seawell Goes Global – Seadrill Subsidiary Acquires Allis-Chalmers Energy
Last Friday, Seawell Limited, a majority (73.8%) owned subsidiary of Seadrill, announced that it had entered into a definitive merger agreement providing for the acquisition of Allis-Chalmers Energy by Seawell in a transaction valued at approximately $890 million, including assumed debt. The new company will rank in the top ten of the leading oil service companies.
With highly complimentary services, the combined oil service company will operate its Drilling and Well Services offerings with a global footprint covering more than 30 of the world’s key oil and gas regions. The combined Drilling Services offering will include platform drilling, land contract drilling, modular rigs, maintenance of drilling systems, directional drilling technology, underbalanced drilling, facility engineering services, rig and riser inspections, and oilfield rentals. The company will be able to provide its customers with fully integrated drilling services, both onshore and offshore, with more than 4,000 experienced drilling crew members and senior directional drillers. The Well Services offering will include electric and mechanical wireline services, production logging services, coil tubing services, ultrasonic investigation logging services, down-hole cameras, and advanced well fishing services. Analyst estimates project that the new company would generate $1.3 billion in revenues and $195 million in EBITDA in 2010.
Continue Reading
In Some Respects, a Return to Normalcy
This week Dealogic published its first half 2010 Bookrunner and MLA Tables for Syndicated Shipping Loans and the news was still dismal but in some respects hopeful. In terms of the big picture, while dollar volumes continued their downward trend, the number of deals in the first half actually increased slightly indicative of, perhaps, less capacity or more focused lending. While the number of club deals increased slightly, from 19 to 23, the deal value declined in proportion to total volume intimating at the revival of the larger syndications. And finally, approximately 90% of the dollar volume was new business rather than refinancings, which is indicative of an improving credit market. Illustrative data are shown graphically herein.
But, for our readers, it is truly the standings that matter as they represent a scorecard of their performance for the first half of the year. While there was shifting in the standings compared to a year ago, the bookrunner table remained relatively stable. Mitsubishi UFJ displaced its fellow Japanese bank, SMBC for the pole position, while DnB NOR moved into second pushing Nordea into the 4th spot. Outsiders from a year ago, Credit Agricole CIB and ABN AMRO found spots in the top ten this time around. In terms of number of deals, DnB and Mizuho had a substantial lead recording 9 and 8 deals respectively far outpacing the remaining bookrunners. Finally, market share is clearly more concentrated at the top compared to the comparable period last year.
Continue Reading
Seadrill Taps Bond Market
Last week, Seadrill successfully completed the offering for a five year $500 million senior unsecured convertible bond. Although the books were oversubscribed beyond the original $600 million offering, Seadrill opted to cap the sale at $500 million.
The bond was priced at par to yield 4.875% and will mature in September 2014. The conversion price is $25.18, a 35% premium to the VWAP of the shares on the date of pricing. Given the run-up of the share price (94% YTD), the bankers balanced the two by pricing the offering at the high end of the yield while providing a lower conversion premium.
Continue Reading
Complications Unwound. How DRYS Got There.
Last week, DryShips announced that it had agreed to acquire, from George Economou and other third party interests, the remaining 25% minority interest in Primelead Shareholders, Inc., the holding company and operating platform for DryShips ultra deepwater drilling rig assets including two owned and operational ultra deepwater semisubmersibles and 4 newbuilding drillship contracts as well as the commercial operating company, Ocean Rig ASA.
The transaction was structured to minimize the cash outlay and leverage with the price being dilution. Consideration for the transaction included $50 million in cash and the issuance of $280 million in face value of mandatorily convertible preferred stock, based upon a price per share of $5.36, the weighted average seven day trailing price. At the offering price, this equates to 52.2 million shares. The shares are manditorily convertible in four equal installments at $6.83 per share (a 27.5% premium) upon delivery of each of the four newbuilding drillships.
Has Mr. Fredriksen Tapped Out the Banks?
On Tuesday, Seadrill announced that it had secured commitments for a senior secured credit facility in the amount $1.5 billion from a group of commercial lending institutions and export credit agencies.
The proceeds will be used to refinance the existing $1.0 billion bridge loan facility with the excess, a mere $500 million, to be utilized for general corporate purposes. The facility will be secured by 1st priority mortgages on two ultra-deepwater semi-submersible drilling rigs, one deepwater drillship and one jack-up rig.
Learning From the Master
Seadrill, last week, acquired an 80.2% interest in the Petromena NOK 2,000 million bond loan. The bond loan is secured by two new deepwater rigs that have scheduled deliveries from the Jurong shipyard in April and September this year. Seadrill has invested NOK 1,100 million in the bond loan, which gives a credit exposure of substantially less than US$400 million per rig.
The Company considers the position in the bond loan as an attractive low risk investment in assets where Seadrill has strong expertise and knowledge. Seadrill has, in the last year, taken delivery and successfully commenced operations for two rigs of similar design from the same yard and have, in addition, two further units under construction at the yard for delivery in 2010 and 2011. The investment in the bond loan will provide a direct yield of 14.2 percent and a yield to maturity of 26.2 percent. If a situation should arise where Petromena is not in the position to finance the rigs or repay the amounts due to the Bondholders in accordance with the existing loan agreements, Seadrill might be prepared to assist the projects with senior financing and operational expertise in order to maximize the recovery to bondholders.
Messrs. Fredriksen and Troim, despite their issues with Golden Ocean, don’t miss an opportunity and they make a good return while they wait.
The Official Guide To Marine Finance Providers
Shipping Index
