Paragon Offshore plc disclosed that certain wholly owned subsidiaries of the company, which were part of the company's acquisition of Prospector Offshore Drilling SA, have entered into a combined $300 million sale-leaseback financing facility with subsidiaries of SinoEnergy, a private investment firm registered in the British Virgin Islands. Net of fees and expenses, Prospector expects to receive net proceeds of approximately $292 million.
Under the terms of the agreement, Prospector will sell two heavy-duty, harsh-environment jackups, Prospector 1 and Prospector 5, to subsidiaries of SinoEnergy and immediately enter into a bareboat rental charter for the assets for a period of five years.
The bareboat charter fee for Prospector 1, which is under firm contract until mid-September 2016, is $71,000 per day through November 2016, after which it will be $42,000 per day for the remainder of the charter. The bareboat charter fee for Prospector 5, which is under firm contract until mid-November 2017, is $71,000 per day through February 2018, after which it will also be reduced to $42,000 per day. The combined implied cost of borrowing is approximately 7.5%, including fees and expenses. The lease financing is non-recourse to Paragon. The facilities are expected to fund by early third-quarter 2015.