Daily News: June 30, 2014

Deutsche Bank Coordinates Seadrill Term Loan

Seadrill Partners announced that it has closed the proposed $1.1 billion add-on senior secured term loan B announced on June 5.

Deutsche Bank Securities is acting as sole global coordinator. Deutsche Bank Securities, Barclays Bank and Goldman Sachs are joint lead arrangers and joint bookrunners. ABN AMRO Capital USA, BNP Paribas, Crédit Agricole and Investment Bank and ING Bank NV are acting as co-managers.

The add-on term loan was upsized from US$1 billion and priced at the existing rate of Libor plus 3%.

The loan will be borrowed by two of the company’s subsidiaries, as borrowers, guaranteed by certain of the company’s existing and future subsidiaries, and secured by six of the company’s ultra-deepwater drilling rigs and certain other assets on substantially the same terms as the company’s existing $1.8 billion term loan incurred in February 2014. Proceeds of the term loan are to be used to refinance certain existing indebtedness, pay transaction expenses, and for general company purposes.

In conjunction with the formation of Seadrill Partners in 2012 and subsequent dropdown of the West Auriga, back-to-back and intercompany loans were used to finance the debt portion of the transactions. As well as being overly reliant on Seadrill, this structure had an aggressive amortization profile that was not optimal for Seadrill Partners.

This add-on term loan is a continuation of the financing strategy put in place in February with a 1% amortization profile that further enhances the company’s ability to efficiently manage its replacement capital expenditure reserves by investing in new assets. The company continues to be rated BB-Ba3 following this transaction.