Borr Drilling has reached agreements with its largest creditors, the Singaporean yards, to refinance and defer a combined $1.4 billion debt maturities and delivery instalments from 2023 to 2025.
The Oslo and New York-listed drilling group said the agreements marked “a major step forward” in its plans to address its debt maturities and commitments currently due in 2023.
In return for these concessions, the Company has agreed to make cash repayments on the accrued costs and capitalised payment-in-kind interest owed to the yards during 2022 and 2023, in addition to other amendments made in January 2021 negotiations.
These additional payments amount to $22.4 million at the completion of the amendment agreements for the deferral (including $6.5 million of amendment fee), expected to be in January 2022 and an additional $28.6 million payable later in 2022.
It agreed to pay remaining deferred yard costs and capitalised interest – originally due in 2023 – during 2023 and 2024. In addition, it said it would make regular payments of cash interest and capital costs for deferring deliveries, beginning in 2023.
The agreement in principle also contemplates applying a portion of future net equity offerings (approximately 35%) to repay amounts owed to the yards, first to be applied to the accrued and capitalised costs, and secondly to repay principal.
Both agreements are subject to the yards’ board approvals, expected in mid-January 2022, and the consent from the Company’s other creditors.
Subsequently, Borr said it was considering raising approximately $30 million in new equity via a share offer, to cover the $22.4 million in incremental cash payments due to the shipyards.
It said investors had already committed to subscribe to the offer, with settlement expected by mid-January 2022.
Based on its contracted backlog, expected roll-over of current contracts and additional contract awards through 2022, Borr said it expects to have at least 18 rigs operating by mid-2022.
CEO Patrick Shorn added: “With a very large portion of the debt now being deferred, strong operational performance on our 18 rigs contracted and the expected further improvements in Adjusted EBITDA, we are positioned to fully benefit from a recovery in the jack-up drilling market.”
Posting its Q3 results in November, the drilling firm said it was seeing “stronger customer demand” for its rigs, with greater discussions and tending.
If approved, the yard agreement expects Borr Drilling to refinance maturities of its senior secured credit facilities and Hayfin facilities and convertible bonds which mature in 2025 or later. If that refinancing is not complete by June 2022, the refinancing of maturities and delivery deferrals will revert to the current schedule.
Borr Drilling said it would continue to engage with lenders to find a solution to defer or refinance the remaining debt maturities currently due in 2023, to ensure a long-term financing solution.