Seadrill intends to issue up to US $650 million in principal amount of convertible bonds with a seven-year tenor. This amount includes an increase option of up to US $100 million that has been granted to the joint bookrunners of the offering.
The senior, unsecured bonds will be convertible into common shares of the Company. The bonds are expected to have an annual coupon in the range of 2.875% - 3.375% payable semi-annually in arrear and a conversion premium of 30% - 35% over the volume weighted average price of the Company's shares on the Oslo Stock Exchange (converted into US$) at the time of pricing.
The convertible bonds will be issued and redeemed at 100% of their principal amount and will, unless previously redeemed, converted or purchased and cancelled, mature in October 2017. Holders of the bonds will be entitled to require an early redemption of the bonds on the fifth anniversary after the issue date, at the principal amount together with accrued interest. Seadrill will have the right to call the bonds after five years plus 21 days, if the value of the Seadrill shares underlying one bond on the Oslo Stock Exchange (translated into USD) exceeds, for a specified period of time, 150% of the principal amount of the bond.
The bonds are expected to be issued on or around October 27, 2010. Seadrill may decide to list the bonds on an exchange at a later stage.
Seadrill has in the recent months seen signs of strengthening offshore drilling market. The number of enquiries from oil companies is increasing in all segments where Seadrill operates, particularly focusing on modern equipment managed by experienced operators. Seadrill believes that this trend will continue in the years to come and wants to capitalize on these opportunities and continue to grow. Having recently entered into two newbuilding contracts for additional jack-up rigs capacity at attractive pricing levels, the Company is currently in advanced discussions regarding other growth investments. These will further position Seadrill as a company focused on rapid growth with modern premium assets. The proceeds from the issuance will be used to part finance these investments. A portion of the proceeds may be used to buy back part of Seadrill's existing convertible bonds.
ABG Sundal Collier, Credit Suisse and Deutsche Bank are acting as joint bookrunners. DnB NOR Markets, Nordea Markets and SEB Enskilda are acting as co-managers.
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