Borr needs more time to put in place financing solution
Offshore drilling contractor Borr Drilling is still engaged in talks with creditors to find a financing solution, which will enable it to extend its 2023 debt maturities and refinance.
Borr Drilling has taken several steps to ensure it will be able to reap the benefits of the recovering market and the first step was disclosed in December 2021 when the company explained it had reached agreements in principle with its largest creditors to refinance and defer a combined $1.4 billion of debt maturities and delivery instalments from 2023 to 2025.
The company followed up on this announcement by stating that it was contemplating an equity offering of $30 million in its quest to successfully complete its refinancing and once this equity offering was completed on 28 December 2022, it brought Borr closer to implementing its refinancing strategy.
In January 2022, Borr informed that it had received consent from creditors for the extension of debt maturities and delivery instalments from 2023 to 2025 to pursue a durable financing solution.
To this end, the firm 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 an update on Thursday, regarding its ongoing negotiations with creditors to reach mutual agreements to refinance and extend its 2023 maturities to complete such refinancing by 30 June 2022, Borr Drilling revealed that “significant progress” has been made in the negotiations with the target to put in place the right capital structure for the company going forward.
The offshore drilling contractor further explained that a complete solution will require a further “equity injection combined with debt repayments, extensions and concessions by the creditors, resulting in a robust capital structure that supports a low cash break-even and thereby a higher free cash generation.”
To this end, the necessary covenant waivers have been extended until 15 July 2022 by the lenders in the bank syndicate, enabling the firm to have the required time to conclude full lock-up and commitments from all creditors.
Borr confirmed that “specific proposals” have been received from all creditor groups, some of which have already resulted in agreements in principle, such as the deal for the refinancing of the senior secured bank facility in July 2022 to be funded with a mix of a new credit facility and equity/an asset sale.
“We will continue to work with all remaining creditors to arrive at an optimised overall financing solution, targeted to be in place by 15 July 2022,” concluded the company.
When it comes to Borr Drilling’s latest deals, it is worth noting that the firm entered into a deal with an undisclosed buyer in late June 2022 for the sale of three jack-up rigs, which are still under construction with Keppel FELS.