Borr Drilling - Creditors sign off on Borr’s first step in financing quest

Borr creditors sign off on deferral agreements with yards

Offshore drilling contractor Borr Drilling has received consent from creditors for the extension of debt maturities and delivery instalments from 2023 to 2025, enabling the company to take full advantage and reap the benefits from a recovery in the jack-up drilling market in a bid to pursue a durable financing solution.

Norve jack-up rig (for illustration purposes); Source: Borr Drilling

At the end of last year, Borr reached agreements in principle with its largest creditors – the Singaporean yards – to refinance and defer a combined $1.4 billion of debt maturities and delivery instalments from 2023 to 2025 to benefit from a recovery in the jack-up drilling market.

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As previously reported, the company followed up on this announcement by stating that it was contemplating an equity offering of $30 million, which the firm completed on 28 December 2021 in a quest to successfully complete its refinancing.

At the time, a condition for full completion of the equity offering was obtaining approvals and waivers deemed necessary and appropriate from Borr’s other creditors – including Hayfin and DNB Bank and the other lenders in the senior secured facilities – to enter into the amendment agreements with the yards for deferral of debt maturities and delivery instalments from 2023 to 2025.

In its latest update on Wednesday, Borr confirmed that it had received consent from these creditors to enter into the agreements with the shipyards as per the terms agreed in December 2021.

Patrick Schorn, Borr Drilling’s CEO, commented: “We are pleased to have reached agreements with the creditors in the facilities for the implementation of the deferral agreements with the yards. This is an important step in order to find a long-term financing solution for Borr Drilling.”

In light of this, the firm has agreed to enter into negotiations with the lenders of the facilities and certain holders of the 3.875 per cent senior unsecured convertible bonds due in 2023 and use its best efforts to reach a binding refinancing of the facilities and the convertible bonds by 31 March 2022 with the refinancing completion expected by 30 June 2022.

In addition, the company agreed with the lenders to an amendment regarding one of its financial covenants, ensuring its book value to equity ratio requirement will remain 25 per cent until 30 June 2022.

Furthermore, the settlement date of the offer shares is expected to be on or about 28 January 2022, subject to fulfilment of the other closing conditions.