Seadrill rids itself of Archer guarantees

Offshore driller Seadrill has closed a deal with oilfield services firm Archer to extinguish $253 million in financial guarantees provided by Seadrill.

The scrapping of the guarantees comes in exchange for a cash payment of approximately $25 million.

Seadrill said on Wednesday it remained in “constructive discussions” with Archer and its lenders to extinguish the remaining $25 million of financial guarantees in exchange for a cash payment representing 10% of their face value.

Seadrill said the deal was part of its restructuring plan.

Also, as part of Archer’s restructuring plans, Seadrill has also agreed to convert $146 million in subordinated loans and accrued interest provided to Archer into a $45 million subordinated convertible loan.

This means Seadrill will have a conversion right into equity of Archer in 2021 based on a strike price of $2.083 per share which is approximately 75% above the subscription price in Archer’s private placement on February 28, 2017.

The subordinated convertible loan will bear interest of 5.5%, and it matures in December 2021.

In a separate statement, Archer said the the loan conversion reduces its interest bearing debt by $80 million and other liabilities by $21 million.

As for the cash obtained from the release of the Seadrill guarantees, Archer has agreed with its banks to apply that payment to reduce its bank debt by approximately $25.3 million.

Offshore Energy Today Staff

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