Ensco gains support from banks ahead of Atwood deal closure
UK-based offshore driller Ensco has received commitments from lenders to extend the maturity date of its revolving credit facility by two years in connection with its pending acquisition of rival driller Atwood Oceanics.
In a statement on Thursday, Ensco said that the maturity date of its revolving credit facility would be extended from September 30, 2020 to September 30, 2022 on an unsecured basis, which would provide additional liquidity and financial flexibility following the pending acquisition of Atwood.
The driller explained that, if an amendment is executed, availability under the facility would be $1.2 billion from October 1, 2019 to September 30, 2022, an increase from $1.1 billion under Ensco’s current revolving credit facility and a two-year extension from the current facility’s expiration.
Under the amendment, Ensco would have borrowing capacity of $2.0 billion through September 30, 2019 as compared to $2.25 billion under current terms. The amendment would provide for additional guarantees from certain Ensco entities and would include certain additional restrictions on Ensco and its subsidiaries.
Ensco’s President and CEO, Carl Trowell, commented, “We are pleased with the support of our banking group and their recognition of the strengthened position that the Ensco fleet will have following the acquisition of Atwood. With the proposed extension of our revolver commitments into 2022, we further enhance the pro forma company’s financial flexibility through greater access to liquidity beyond 2019. We will continue to have one of the strongest liquidity positions in the offshore drilling sector, giving us a competitive advantage as we move forward as a combined company.”
Ensco’s SVP and CFO, Jon Baksht, added: “We are pleased that the proposed revolving credit facility would be retained on an unsecured basis, increase our aggregate commitments beyond 2019 and provide us with enhanced financial flexibility over the next five years. Under the amendment, we would add a coverage ratio covenant for subsidiary guarantees and have restrictions on certain non-operational activities when facility borrowings are outstanding. There would be no covenants based on operating cash flows under the proposed amendment and we maintain the flexibility to raise incremental capital through secured debt and asset sales.”
Ensco noted that the commitments announced on Thursday were non-binding, being subject to negotiation of definitive documentation and contingent upon the closing of the pending merger with Atwood.
As previously reported, Ensco and Atwood said they would hold their respective shareholder meetings related to the merger on October 5, 2017. Back in August, both the Ensco and Atwood boards of directors unanimously recommend that shareholders vote “FOR” the approvals necessary to complete the proposed merger.
“We expect to complete the amendment on or before the closing of the merger with Atwood and become effective shortly after the merger closing. At this time, there can be no assurance that Ensco will successfully negotiate and enter into definitive documentation with respect to the amendment,” the company concluded.