Odfjell Drilling takes loan for acquisition of former Stena rig

Offshore driller Odfjell Drilling has accepted an offer from bank lenders for a $325 million senior secured term loan facility to finance the acquisition of the former Stena-owned Deepsea Nordkapp drilling rig. 

It is worth reminding that the UK driller Stena Drilling ordered the Stena Midmax rig from the South Korea’s Samsung Heavy in 2013. However, the driller cancelled the order in 2017 claiming Samsung was unable to complete and deliver the unit within the contractually agreed timeframe.

Odfjell Drilling announced its plans for the acquisition of the Deepsea Nordkapp, formerly known as Stena Midmax, a Moss CS60E semi-submersible drilling rig, back in April.

Odfjell Drilling’s plan was to finance the acquisition of the rig through a contemplated $325 million senior secured term loan facility, proceeds from the private placement, proceeds from a contemplated issue of preference shares to an affiliate of Akastor and a seller’s credit from Samsung Heavy of $48.25 million.

Planning for the acquisition of the former Stena rig, Odfjell in April completed a private placement raising gross proceeds of approximately $175 million.

At the end of April, Aker BP awarded Odfjell Drilling a two-year firm drilling contract with 1+1 year optional periods. For the purpose of the drilling contract with Aker BP, Odfjell Drilling entered into an agreement with Samsung Heavy Industries to purchase the Stena MidMax for $505 million.

The bank lenders’ offer for a $325 million senior secured term loan facility was accepted on Tuesday, August 28, 2018.

Odfjell said on Tuesday that the facility includes a tranche of $162.5 million guaranteed by K-SURE and a five-year commercial bank tranche of $162.5 million. The loan facility is available at delivery of Deepsea Nordkapp, expected in 1Q 2019.

The facility will be repaid by quarterly installments of $8.55 million, first time in 4Q 2019. At the current swap rate the total average interest is approx. 5.4% p.a.

The offer is subject to final documentation, and signing of the finance documents are expected by end of September 2018.

Following this, Deepsea Nordkapp is fully funded, including ready-to-drill project costs and working capital requirements, with bank debt, equity and yard seller’s credit.

Profit down in 2Q 

On Wednesday, Odfjell Drilling released its report for the second quarter of 2018.

According to the report, the driller recorded operating revenues of $175 million in 2Q 2018, compared to $165 million in the same period last year. This was achieved due to increased activity in Drilling & Technology as well as Well Services segment, offset by decreased
revenue in the MODU segment from 2Q 2017 to 2Q 2018.

The company’s net profit for this year’s second quarter was $7 million, compared to a profit of $11 million in the corresponding period last year.

The company’s contract backlog is $2.7 billion, whereof $1.6 billion is firm backlog. The comparable figure at the end of 2Q 2017 was $2.7 billion, whereof $1.4 billion was firm backlog.

Offshore Energy Today Staff