Prospector getting ready for new rig delivery
- Business & Finance
Prospector Offshore Drilling S.A. expects that one of its subsidiaries will take delivery of PROSPECTOR 5, from the Shanghai Waigaoqiao Shipbuilding Co. Ltd (“SWS”) Shipyard in Shanghai, China, on Monday, 16 June 2014.
PROSPECTOR 5 is the second in the Company’s series of five high specification, harsh environment jack-up drilling rigs built to the Friede and Goldman JU2000E design. Upon delivery the rig will be mobilized to the UK sector of the North Sea where it is expected to begin its contracted work for Total E&P UK Limited and Elf Exploration UK Limited (“Total”) in September, in line with prior expectations. As previously announced, PROSPECTOR 1 is being remunerated at a reduced day rate per its amended charter contract with Total. This situation is continuing today while Total’s Franklin location is being prepared to accept PROSPECTOR 1.
Prospector Offshore Drilling currently expects that this situation will continue through the third quarter, at which time PROSPECTOR 1 will start its 730 day charter contract.
The Company’s previously announced new debt financing package, which is comprised of a fully committed Senior Secured Credit Facility (the “Senior Credit Facility”) in the amount of USD 270 million and a second lien bond (the “Bond Loan”) in the amount of USD 100 million, has been modified in order to account for the delay in the start of the PROSPECTOR 1 730 day charter contract with Total.
The lenders have agreed to waive the requirement that PROSPECTOR 1 has begun its 730 day charter contract with Total in return for a guarantee of USD 45 million from the Company’s two major shareholders, Skeie Technology AS and Ferncliff TIH 1 AS (the “Guarantee”).
The Guarantee from these two shareholders will be in effect until PROSPECTOR 1 begins its 730 day charter contract with Total, or until the Company replaces the Guarantee with a cash deposit of USD 45 million (or a lessor amount if the PROSPECTOR 1 tranche of the Senior Credit Facility has been amortized).
The Company is paying a market determined rate for the Guarantee and the Guarantee can be cancelled at any time by the Company at no cost. The Company will draw down USD 140 million of the Senior Credit Facility and USD 50 million of the Bond Loan in order to take delivery of PROSPECTOR 5. The remaining USD 130 million of the Senior Credit Facility and USD 50 million of the Bond Loan will be used in July 2014 to refinance USD 129.5 million of existing debt secured by PROSEPCTOR 1 and for general corporate purposes.
Robert W. Rose, the Company President and Chief Executive Officer, commented today: “The delivery of PROSPECTOR 5 is an important milestone towards our goal of building and operating a modern fleet of high specification jack-up rigs that are capable of working in harsh environments. At this time we would like to extend a special thank you to SWS for their unwavering dedication to this project. Also, we would like to thank everyone who has shown their support for the company by helping us to put in place a truly exceptional debt financing package.”