Borr ponders equity offering of $30 million to bring its refinancing strategy to life

Borr ponders equity offering of $30 million to bring its refinancing strategy to life

Offshore drilling contractor Borr Drilling is contemplating an equity offering of $30 million in its quest to successfully complete its refinancing and defer $1.4 billion of debt maturities and yard instalments to 2025 while taking full advantage of the recovery in the jack-up drilling market, which seems to be taking shape despite the ongoing pandemic.

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

Borr Drilling announced on Monday that it was contemplating offering approximately $30 million in new depository receipts, representing the beneficial interests in the same number of the company’s underlying common shares – each with a par value of $0.10. The subscription price in this equity offering will be set following an accelerated book-building process.

The firm says that certain investors have pre-committed to subscribe to offer shares in the equity offering in the amount exceeding $30 million. If the process is successful, the net proceeds from the equity offering will be used for repayment to yards, to strengthen the company’s working capital and for general corporate purposes.

Furthermore, the application period opened on Monday, 27 December 2021 and it is set to end on 28 December 2021, however, Borr Drilling may, at its own discretion, extend or shorten the application period at any time and for any reason.

The firm explains that the minimum application and allocation amount in the equity offering has been set at the USD equivalent of €100,000 ($113,245), although, Borr Drilling may, at its sole discretion, allocate an amount below this.

Equity offering completion hinges on several approvals and factors

Borr Drilling elaborates that the completion of the equity offering is subject to several conditions. First, it is dependent upon board approvals by the Singaporean yards for amendments to the company’s financing arrangements with the yards as described in the yard refinancing transactions.

The firm needs to obtain such approvals and waivers as deemed necessary and appropriate from the company’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.

The board needs to approve the transaction and resolve to consummate the equity offering and allocate the offer shares, while each applicant should acknowledge that the equity offering may be cancelled if the conditions are not fulfilled.

In addition, Borr Drilling and the managers further reserve the right – at any time and for any reason – to cancel and/or modify the terms of the equity offering and neither the managers nor the firm will be liable for any losses if the equity offering is cancelled, or the terms modified, irrespective of the reason for such cancellation or modification, based on Borr’s statement.

The firm further adds that the allocation of the offer shares will be determined at the end of the application period, and the final allocation will be made by the board at its sole discretion, with a preference for existing shareholders.

Moreover, the notification of the allocation is expected to be sent by the managers on or about 28 December 2021 while settlement of the equity offering is expected in mid-January 2022, subject to the fulfilment of these conditions.

This equity offering will be carried out as a private placement as the board is of the opinion that this is in the best interest of the company and its shareholders, after taking into consideration – among other things – the fact that the equity offering will provide necessary liquidity and raise capital more quickly and, at an attractive price, compared to a rights issue.

Sembcorp Marine agrees to extend Borr’s payment timeline

Meanwhile, Sembcorp Marine reported on Tuesday that its wholly-owned subsidiary, PPL Shipyard, had reached an agreement in principle with Borr Drilling to defer PPL Shipyard’s receivables from Borr Drilling from 2023 to 2025.

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This comes on the heels of Borr Drilling’s announcement from Monday, in which 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 in its attempt to benefit from a recovery in the jack-up drilling market.