ADES secures new loan to pay for three Nabors rigs
- Business & Finance
ADES International, a London-listed provider of offshore and onshore oil and gas drilling and production services in the Middle East and Africa, has secured a new loan from a Saudi bank to finance the acquisition of three jack-ups from Nabors and other potential deals.
ADES said on Thursday that a SAR 525 million ($140 million) standby credit facility was secured from Alinma bank, one of the Saudi-based financial institutions.
The facility will be used to finance the previously announced acquisition of three operational offshore jack-up rigs from Nabors Industries, for which the company signed a purchase and sale agreement in December 2017, in addition to other potential acquisitions of rigs to be operated in the Kingdom of Saudi Arabia. The total purchase price of the deal with Nabors is $83 million, payable in a combination of cash and ADES shares.
It is worth mentioning that the three ultra-shallow drilling rigs have each been in continuous service for more than 10 years. The rigs have recently been refurbished, with five-year inspections already implemented on two rigs and the third is due in 2018.
This facility adds to the recently secured $450 million facility arranged by the Bank of America Merrill Lynch and the European Bank for Reconstruction and Development and further enhances the group’s purchasing power.
This standby credit facility has a seven-year tenor with a 24-month grace period. According to ADES, the profit rate is highly competitive and is in line with prevailing market rates in Saudi Arabia; and repayment of the principal amount will start 24 months from the signing date and will be calculated using the straight-line amortization method, with a fixed repayment rate of 11.1%, payable semi-annually.
Commenting on the facility agreement, Dr. Mohamed Farouk, Chief Executive Officer of ADES International Holding, said: “ADES is participating in multiple tenders and screening acquisitions across Saudi Arabia and the wider GCC region, and this KSA Facility further strengthens our purchasing power, providing us with greater flexibility to consider and act swiftly on value-accretive acquisitions.”