Transocean Poseidon to price $550 million eight-year secured notes in Wednesday drive-by

By Paul A. Harris

Portland, Ore., Jan. 23 – Transocean Poseidon Ltd. plans to price a $550 million offering of eight-year senior secured notes (current ratings B1/B+) in a quick-to-market Wednesday transaction trailing a mid-morning conference call with investors, according to market sources.

Initial talk has the deal pricing in the 99 area to yield 7% to 7¼%, a trader said.

Morgan Stanley & Co. LLC, Wells Fargo Securities LLC, Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, DNB Markets and Credit Agricole CIB are the joint bookrunners for the Rule 144A for life and Regulation S deal.

SEB, Barclays, SpareBank and NIBC are the co-managers.

The notes become callable after three years at par plus 75% of the coupon.

There is a mandatory redemption for 12½% of the issue each 12 months from February 2022 through August 2023, and 15% of the issue each 12 months from February 2024 onwards.

The security on the notes includes a first lien on the Deepwater Poseidon drilling rig, all amounts due under the Shell contract and insurance proceeds.

Among the covenants is one specifying that the issuer must maintain a six-month debt service reserve account.

The Steinhausen, Switzerland-based provider of offshore drilling services, known internationally by its stock ticker RIG, plans to use the proceeds to partially finance the construction or acquisition of the collateral rig and to fund the initial debt service reserve to be held by the trustee.

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