Borr Drilling Limited - Announces Pricing of Additional Offering of 10.000% Senior Secured Notes due 2028 For Proceeds of $150 million

Rhea-AI Summary

Borr Drilling (NYSE and OSE: BORR) has announced that its subsidiary, Borr IHC , has priced an offering of additional 10.000% senior secured notes due 2028 for gross proceeds of approximately $150 million. These Additional Notes will have the same terms and conditions as the existing $1.225 billion aggregate principal amount of senior secured notes due 2028.

The proceeds are intended for the acquisition and activation costs of the newbuild rig "Vali", replacing a previously secured yard financing. This change was made due to more advantageous terms and pricing for the Additional Notes. The funds will also be used for general corporate purposes, including debt service. The settlement of the notes offering is expected around August 16, 2024, subject to customary closing conditions.

Positive

• Secured $150 million in gross proceeds through additional notes offering
• More advantageous terms and pricing compared to previously secured yard financing
• Funds allocated for acquisition and activation of newbuild rig "Vali"

Negative

• Increase in debt with additional $150 million in senior secured notes
• Potential increase in interest expenses due to 10.000% interest rate on new notes

Financial Analyst

Borr Drilling's decision to issue $150 million in additional notes at 10% interest is a strategic financial move. While the high yield reflects the risky nature of the offshore drilling sector, it's notable that they're able to secure funding on the same terms as their existing notes. This suggests market confidence in Borr's operations and future prospects.

The use of proceeds for the 'Vali' rig acquisition and activation is growth-oriented, potentially enhancing future revenue streams. However, investors should be cautious about the increased debt load and its impact on the company's financial flexibility. The preference for these notes over yard financing indicates favorable market conditions for Borr, but also highlights the high cost of capital in this industry.

Oil & Gas Industry Expert

The acquisition of the 'Vali' newbuild rig signals Borr Drilling's commitment to fleet modernization, a important strategy in the competitive offshore drilling market. Modern rigs typically command higher day rates and are more attractive to operators, potentially boosting Borr's contract winning capabilities.

However, the timing is critical. With oil prices fluctuating and energy transition pressures, the long-term demand for offshore rigs remains uncertain. Borr's move suggests confidence in the sector's near to medium-term prospects, but investors should monitor global energy trends and Borr's contract backlog closely. The 10% interest rate, while high, is not uncommon in the current offshore drilling landscape, reflecting the industry's perceived risk profile.

Corporate Finance Expert

Borr's decision to issue Additional Notes instead of using yard financing is financially savvy. It suggests the company has found more favorable terms in the bond market than through traditional shipyard financing, which could lead to cost savings and improved cash flow. However, this move also increases the company's leverage, which could be a concern if market conditions deteriorate.

The uniform terms with existing notes simplify Borr's debt structure, potentially making future refinancing easier. Investors should note the 'general corporate purposes including debt service' clause, which provides financial flexibility but could also be used to service existing debt, potentially signaling cash flow pressures. Overall, this move demonstrates Borr's proactive financial management, but also underscores the capital-intensive nature of the offshore drilling industry.

08/09/2024 - 04:41 PM

HAMILTON, Bermuda, Aug. 9, 2024 /PRNewswire/ -- Borr Drilling Limited (the "Company") (NYSE and OSE: BORR) announced today that its wholly-owned subsidiary Borr IHC Limited has priced an offering of additional 10.000% senior secured notes due 2028 (the "Additional Notes") for gross proceeds of approximately $150 million.

The Additional Notes will have the same terms and conditions as the existing $1.225 billion aggregate principal amount of senior secured notes due 2028.

The proceeds from the offering are intended to be used for the acquisition and activation costs for the newbuild rig "Vali", instead of the previously secured yard financing that was intended for the newbuild, as the terms and pricing for the Additional Notes are more advantageous, and for general corporate purposes including debt service. Settlement of the notes offering is expected on or about August 16, 2024 and is subject to customary closing conditions.

This information is considered to be inside information pursuant to the EU Market Abuse Regulation and subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

Important note

This announcement is not being made in or into Canada, Australia, Japan, Hong Kong or in any other jurisdiction where it would be prohibited by applicable law. This distribution is for information purposes only and does not constitute or form part of an offer or solicitation of an offer to purchase or subscribe for securities in the United States or in any jurisdiction in which, or to any persons to whom, such offering, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any jurisdiction. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933 (the "U.S. Securities Act") or applicable state securities laws, and may not be offered or sold in the United States or to U.S. persons unless such securities are registered under the U.S. Securities Act, or an exemption from the registration requirements of the U.S. Securities Act is available.

Forward looking statements

The press release include forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, including the expected closing date of the Additional Notes offering, the intended use of proceeds and other non-historical statements. These forward-looking statements are subject to numerous risks, uncertainties and assumptions, including risks relating to the closing of the Additional Notes and actual use of proceeds and other risks included in our filings with the Securities and Exchange Commission including those set forth under "Risk Factors" in our annual report on Form 20-F for the year ended December 31, 2023 and in prospectuses filed with the Norwegian Financial Supervisory Authority (FSA). Forward-looking statements reflect knowledge and information available at, and speak only as of, the date they are made. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date hereof or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on such forward-looking statements.

August 9, 2024
The Board of Directors
Borr Drilling Limited
Hamilton, Bermuda

CONTACT: 
Questions should be directed to: Magnus Vaaler, CFO, +44 1224 289208

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Borr Drilling Limited Bond Pricing Release

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SOURCE Borr Drilling Limited

FAQ

What is the purpose of Borr Drilling's $150 million additional notes offering?

The proceeds from Borr Drilling's $150 million additional notes offering are intended for the acquisition and activation costs of the newbuild rig "Vali", as well as for general corporate purposes including debt service.

What is the interest rate and due date for Borr Drilling's new additional notes (BORR)?

Borr Drilling's new additional notes have a 10.000% interest rate and are due in 2028, matching the terms of their existing senior secured notes.

When is the expected settlement date for Borr Drilling's additional notes offering?

The settlement of Borr Drilling's additional notes offering is expected to occur on or about August 16, 2024, subject to customary closing conditions.

How much is Borr Drilling's total aggregate principal amount of senior secured notes due 2028 after this offering?

After this additional offering, Borr Drilling's total aggregate principal amount of senior secured notes due 2028 will be approximately $1.375 billion, combining the existing $1.225 billion and the new $150 million.