Weatherford Sells $1.4B of Debt in Refinancing Effort

Weatherford has announced several capital transactions expected to improve its balance sheet and liquidity position by significantly reducing outstanding debt scheduled to mature in the next three years and increasing available liquidity.

Weatherford priced an offering of $800 million of 5.125% senior notes due 2020 and $600 million of 6.75% senior notes due 2040 after market close on September 16. The Company and Weatherford International, a subsidiary of the Company, will fully and unconditionally guarantee the notes on a senior, unsecured basis. The notes issuance is expected to close on September 23, 2010. The notes will rank equally with all of Weatherford's other unsecured senior indebtedness and will be subject to substantially the same covenants as Weatherford's outstanding senior unsecured indebtedness.

The net proceeds from the offering are expected to be used:

  • to fund the purchase price for the cash tender offers announced separately for up to $700 million of the outstanding 6 ?% Senior Notes due November 15, 2011 of Weatherford Delaware, 5.95% Senior Notes due June 15, 2012 of Weatherford Delaware, 5.15% Senior Notes due March 15, 2013 of Weatherford Bermuda and 4.95% Senior Notes due October 15, 2013 of Weatherford Bermuda;
  • to repay existing short-term indebtedness under the Company's existing revolving credit facility; and for general corporate purposes.

Weatherford also signed a commitment letter with J.P. Morgan Securities Inc., JPMorgan Chase Bank, N.A., Deutsche Bank Securities Inc. and Deutsche Bank AG New York Branch for a new $1.75 billion senior unsecured revolving credit facility. JPMorgan Chase Bank, N.A. and Deutsche Bank AG New York Branch would serve as lenders under the proposed credit facility, with additional lenders to be determined following a syndication process expected to continue until early to mid October 2010. J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc. have agreed to serve as joint lead arrangers and joint book runners for the syndication, arranging and documentation process. J.P. Morgan Chase Bank, N.A. has agreed to serve as administrative agent for the proposed credit facility. Weatherford Bermuda and certain of its subsidiaries would be the borrowers under the proposed credit facility and Weatherford Switzerland and Weatherford Delaware would guarantee the borrowers' obligations under the credit facility.

The proposed new credit facility will replace two of Weatherford's existing credit facilities, which have a combined limit of $1.75 billion of borrowings and are scheduled to expire in May 2011. The proposed facility is not expected to have a financial covenant that is more restrictive than the one in the Company's existing credit facilities. Weatherford is in compliance with the financial covenants in its existing credit facilities. The proposed new credit facility is subject to successful syndication, definitive documentation, closing requirements and certain other conditions. Accordingly, no assurance can be given that this proposed facility will be procured on the terms, including the amount available to be borrowed described above, or at all.

Assuming the bond offering, the tender offers and the new revolving credit facility as described above had been completed, the Company would have had approximately $2.0 billion of available liquidity (including cash on hand) as of June 30, 2010 on a pro-forma basis.