Ocean Rig talks $500 million eight-year secured notes to yield in 6¼% area; pricing Thursday

By Paul A. Harris

Portland, Ore., July 16 – Ocean Rig UDW Inc. talked its $500 million issue of eight-year senior secured notes (B2/B+/) to yield in the 6¼% area, a market source said.

Books close at 10 a.m. ET on Thursday, and the Rule 144A and Regulation S deal is set to price thereafter.

Joint bookrunner Deutsche Bank Securities Inc. is the left joint global coordinator. Credit Suisse Securities (USA) LLC is also a joint global coordinator and joint bookrunner. ABN Amro is also a joint bookrunner.

The notes, which are in the market via subsidiaries Drillships Ocean Ventures Inc. and Drillships Ventures Projects Inc., come with three years of call protection. A special call allows for the redemption of 10% of the notes annually at 103 during the non-call period.

The notes initially will be guaranteed by Ocean Rig and certain of the issuers’ existing and future subsidiaries, and by a security interest in the Ocean Rig Mylos, the Ocean Rig Skyros and the Ocean Rig Athena, and by a pledge of the stock of the issuers and the subsidiary guarantors.

Proceeds, together with a new $800 million term loan and cash on hand, will be used to repay the company’s existing $1.35 billion term loan in full.

Deepwater driller Ocean Rig is a majority owned subsidiary of DryShips Inc., which is based in Nicosia, Cyprus.

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