Transocean extends liquidity with cash tender offers

Transocean Ltd. (NYSE:RIG) announced a senior unsecured notes offering of $1.5 billion due 2023. The offshore contract drilling services provider expects to use the proceeds to repurchase $1 billion of existing notes maturing in 2020, 2021, and 2022.

Specifically, RIG is tendering to purchase its 6.500% Senior Notes due 2020, 6.375% Senior Notes due 2021, and 3.800% Senior Notes due 2022. The total consideration including early tender payment represents a discount of 5.5%, 10.0%, and 24.0% for the notes due in 2020, 2021, and 2022, respectively. Since March 1, 2016, Transocean has repurchased in the open market $228 million of debt securities for an aggregate cash payment of $189 million.

“We believe this is a prudent move that extends the liquidity runway for the company through a potentially protracted offshore drilling market downturn. We estimate that RIG will have liquidity of $3.9B at the end of 2017 (close to $4B-$5B guidance) and revolver draw of only $1B by the end of 2018), but its numerous maturities and capex commitments create a widening gap in 2019 when the $3B revolver matures and in 2020 when $1.9B of capex across seven deferred rigs come due. The company is better off without further large bullet payments in the 2020-2022 period,” Seaport Global Securities analysts said in a note Tuesday morning.

Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now

Whitepapers

Making DDoS Mitigation Part of Your Incident Response Plan: Critical Steps and Best Practices

Like a new virulent strain of flu, the impact of a distributed denial of service (DDoS) attack is...

The Multi-Tax Challenge of Managing Excise Tax and Sales Tax

To be able to accurately calculate multiple tax types, companies must be prepared to continually ...

Operational Analytics in the Power Industry

Cloud computing, smart grids, and other technologies are changing transmission and distribution. ...

Maximizing Operational Excellence

In a recent survey conducted by PennEnergy Research, 70% of surveyed energy industry professional...