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Sevan Drilling ASA: Amendment Bank Agreements and Contemplated Private Placement

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART DIRECTLY OR INDIRECTLY, IN AUSTRALIA, CANADA, JAPAN OR THE UNITED STATES

Oslo, 14 January 2013

Sevan Drilling ASA (the "Company") announces amendments to its existing loan agreements with its lending banks and proposes a private placement of NOK 987 million (equivalent to ~USD 175 million) through an issue of new shares in the Company directed towards Norwegian and international investors (the "Private Placement").

The Company has retained Pareto Securities AS and Swedbank First Securities (collectively referred to as the "Joint Bookrunners") as joint lead managers and joint bookrunners and Carnegie as co- manager for the Private Placement. Rothschild is acting as financial adviser to the Company.

Waivers and amendment agreements with lending banks

As announced on 2 January 2013, the Company has been granted extended waivers from its lenders until the end of February 2013. Lenders to both the Sevan Driller and the Sevan Brasil syndicated facilities have been supportive of the contemplated Private Placement and have formally agreed on to waive all covenants to facilitate this process. Furthermore, the facilities have been amended in order to make them more self-sufficient and thus limit parent company funding of any shortfall going forward, all subject to raising of additional equity as contemplated by the Private Placement.

"The amendments to the bank facility, will allow Sevan Drilling to retain its low cost of debt. Combined with the proceeds from the Private Placement, Sevan Drilling's current funding gap is resolved and the strengthened balance sheet increases our attractiveness as contractor with potential new clients", says CEO Scott Kerr.

Mr. Kerr adds: "We have gained vital experience from completing the start-ups of Sevan Driller and Sevan Brasil, and we are confident that we will deliver newbuilds Rig #3 and Rig #4 on time and budget. Furthermore, marketing is progressing well and we expect to secure a contract for Rig #3 during Q1 2013".

The Private Placement

The gross proceeds from the contemplated Private Placement are expected to amount to NOK 987 million (equivalent to ~USD 175 million). The price in the Private Placement will be determined through an accelerated bookbuilding process. The minimum order and allocation has been set to the number of shares that equals an aggregate purchase price of at least the NOK equivalent of EUR 100,000.

The net proceeds to the Company from the Private Placement will be used as follows: (i) USD 40 million in payment of deferred liabilities and CAPEX, (ii) USD 35 million in pre-payment of bank debt, and (iii) for general corporate purposes.

In connection with the Private Placement, as the Company's primary insiders will not be allowed to participate in the Subsequent Offering (as defined below), the Company has directed a separate tranche towards these primary insiders. In this respect, i.a the Company's CEO, Scott Kerr, CFO Jon Wilmann, and director Kitty Hall has confirmed subscriptions of, respectively, NOK 1 million, NOK 1 million and NOK 200,000.

The bookbuilding period commences today, 14 January 2013, at 09.00 CET and may close at any time on short notice.

The completion of the Private Placement will be conditional upon the following conditions being satisfied:

  • all necessary corporate resolutions being validly made, including without limitation approval by an extraordinary general meeting of the Company expected to be held on or about 6 February 2013 (the "EGM");
  • payment being received for the shares to be issued in the Private Placement;
  • registration of the share capital increase in the Company pursuant to the Private Placement in the Norwegian Register of Business Enterprises; and
  • Execution of amendment agreements with the Sevan Driller and Sevan Brasil bank syndicates on terms in all material respects as agreed and described in the Investor Presentation.

The Company reserves the right to close the book and complete the Private Placement at a level between NOK 828 million and NOK 987 million (equivalent to between ~USD 150 million and ~USD 175 million), subject to agreement with the Company's senior lenders. The Company also reserves the right to complete the Private Placement at a higher level than NOK 987 million.

Subject to successful placement of the Private Placement, the Board of Directors intends to propose a subsequent offering (the "Subsequent Offering"). The subscription price in the Subsequent Offering will be the same as in the Private Placement. The Company's shareholders as of 14 January 2013 (as documented by the shareholder register in the VPS as of 17 January 2013), and who are not resident in a jurisdiction where such offering would be unlawful, or would (in jurisdictions other than Norway) require any prospectus filing, registration or similar action, will receive non-transferable subscription rights based on their shareholding as of that date. Shareholders holding 300,000 shares or more as of 14 January 2013 and shareholders allocated shares in the Private Placement will not receive subscription rights and will not be eligible to participate in the Subsequent Offering. Funds that are under management by the same company, group of companies, fund manager(s) or similar may be treated as one shareholder when applying these limitations.

Enclosed: Company Presentation dated 14 January 2013

As logistical circumstances beyond the Company's control have deferred the time of launch of the Private Placement and a neutralizing of information is required, Oslo Børs has, after a concrete assessment and in order to maintain an orderly market, accommodated a request from the Company to suspend trading in the shares while the bookbuilding is ongoing.

* * * * *

For further information, please contact:

Scott Kerr, CEO (+47 992 83 890)
Jon Wilmann, CFO (+47 905 60 406)

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This press release does not constitute or form part of an offer or solicitation to purchase or subscribe for securities in the United States. The securities referred to herein may not be offered or sold in the United States absent registration or an exemption from registration as provided in the U.S. Securities Act of 1933, as amended. The Company does not intend to register any portion of the offering of the securities in the United States or to conduct a public offering of the securities in the United States. Copies of this announcement are not being made and may not be distributed or sent into the Australia, Canada, Japan or the United States.

Certain statements contained herein that are not statements of historical fact, may constitute forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results or events concerning the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. Although the Company has attempted to identify important factors that could cause actual events or results to differ from those described in forward-looking statements contained herein, there can be no assurance that the forward-looking statements will prove to be accurate as actual future events could differ materially from those anticipated in such statements. Except as may be required by applicable law or stock exchange regulation, the Company undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

Sevan Drilling Company Presentation

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