Nabors Prices $550 Million Senior Guaranteed Notes Offering
Nabors Industries (NYSE: NBR) announced that its subsidiary, Nabors Industries, Inc. (NII), has priced a $550 million offering of senior guaranteed notes due 2031. The notes will bear an annual interest rate of 8.875% and are being offered at 100% of par. The sale is expected to close on July 22, 2024, generating approximately $540.7 million in net proceeds.
The notes will be guaranteed by Nabors and its subsidiaries that guarantee the 7.50% senior guaranteed notes due 2028. Nabors plans to use the proceeds, along with cash on hand, to redeem all of its 7.25% senior guaranteed notes due 2026. Any excess funds will be used for general corporate purposes, including potential repayment of other outstanding debt.
- Successful pricing of $550 million senior guaranteed notes offering
- Expected net proceeds of $540.7 million after expenses
- Opportunity to refinance existing debt with 7.25% senior guaranteed notes due 2026
- High annual interest rate of 8.875% on the new notes
- Increased long-term debt obligation with notes maturing in 2031
Insights
The issuance of $550 million in senior guaranteed notes is a significant financial maneuver for Nabors Industries. These notes, carrying an interest rate of 8.875% and maturing in 2031, will replace the company’s 7.25% senior guaranteed notes due in 2026. This refinancing move highlights a few important points:
Firstly, the higher interest rate of the new notes indicates the current market’s higher risk assessment compared to the previous offering. This can be a concern for investors as it reflects potentially increased perceived risk in Nabors' business environment, or general market conditions.
Secondly, the company plans to use the net proceeds to redeem the older notes and for general corporate purposes. This suggests Nabors is trying to manage its debt profile, pushing the maturity further out while potentially improving liquidity. However, the increased interest cost will impact the company's interest expenses, possibly affecting net income in the short term.
Lastly, the fact that the notes are being offered at par to qualified institutional buyers under Rule 144A and outside the United States under Regulation S indicates that the company is targeting a very specific investor base.
From a retail investor’s perspective, understanding the company’s debt situation and the cost of refinancing is crucial. While Nabors is managing its existing debt, the higher interest rate and extended maturity should be closely monitored.
This debt issuance by Nabors Industries offers important insights into the company’s strategic positioning and market sentiment. The move to refinance existing notes at a higher interest rate can be viewed through the lens of broader market conditions and the company’s future outlook.
The 8.875% interest rate is relatively high, suggesting cautious or risk-averse sentiment among institutional investors regarding Nabors' creditworthiness. This could be influenced by the volatility in the energy sector and Nabors' specific business risks.
However, extending debt maturity to 2031 provides Nabors with more time to execute its strategic plans without facing immediate liquidity pressures. This could be advantageous if the energy market sees a positive turnaround, as it gives Nabors the flexibility to manage its operations and investments without the burden of near-term debt repayments.
For retail investors, the key takeaway is to watch how Nabors leverages this extended timeline and whether the company's operations can generate sufficient cash flow to cover the higher interest costs while improving its financial health. Monitoring industry trends and Nabors' execution of its business strategy will be important in assessing the long-term benefits of this refinancing move.
The Notes will be senior unsecured obligations of NII and will rank pari passu in right of payment with all of NII's existing and future senior obligations, including Nabors'
Nabors intends to use the net proceeds from this offering, along with cash on hand, to redeem all of its
The Notes will be offered and sold to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and to persons outside
The Notes will not be offered or sold in any such jurisdiction except pursuant to an exemption from, or in a transaction not subject to, the relevant requirements of laws and regulations of such jurisdictions.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy the Notes or any other securities of Nabors or its subsidiaries, nor shall there be any offer, solicitation or sale of the Notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful.
The information above includes forward-looking statements within the meaning of the Securities Act and the Securities Exchange Act of 1934, as amended. Such forward-looking statements are subject to certain risks and uncertainties, as disclosed by Nabors from time to time in its filings with the Securities and Exchange Commission. As a result of these factors, Nabors' actual results may differ materially from those indicated or implied by such forward-looking statements. Nabors does not undertake to update these forward-looking statements.
Nabors Industries is a leading provider of advanced technology for the energy industry. With presence in more than 20 countries, Nabors has established a global network of people, technology and equipment to deploy solutions that deliver safe, efficient and responsible energy production. By leveraging its core competencies, particularly in drilling, engineering, automation, data science and manufacturing, Nabors aims to innovate the future of energy and enable the transition to a lower-carbon world. Learn more about Nabors and its energy technology leadership: www.nabors.com.
For further information regarding Nabors, please contact William C. Conroy, CFA, Vice President of Corporate Development & Investor Relations, +1 281-775-2423 or via e-mail william.conroy@nabors.com, or Kara Peak, Director of Corporate Development & Investor Relations, +1 281-775- 4954 or via e-mail kara.peak@nabors.com. To request investor materials, contact Nabors' corporate headquarters in
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SOURCE Nabors Industries Ltd.
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