Seadrill holders to convert $650 million of 3.625% notes, 4.875% notes

By Susanna Moon

Chicago, Dec. 17 - Seadrill Ltd. said holders have submitted notices to convert $340 million of its 3.625% convertible bonds due 2012 and $400 million of its $500 million of 4.875% convertibles due 2014.

The amount of interest holders have shown in converting their 3.625% convertibles exceeds the $250 million cap on the offer, and the company will accept tendered notes on a pro-rata basis, according to a company press release.

Seadrill also noted that under terms of its convertibles due 2014, the 90% clean-up call allows Seadrill to call the remaining bonds at par value plus accrued interest if 90% or more of the original issued amount has been redeemed or converted into shares.

The company announced on Dec. 16 that it began a conversion incentive period for holders of up to $250 million of the 3.625% convertibles and all of the 4.875% convertibles.

The acceptance period ends at 11:30 a.m. ET on Dec. 17.

Holders who convert their bonds into shares will receive a cash payment of about $8,500 per $100,000 principal amount of 3.625% convertibles and about $12,750 per $100,000 principal amount of 4.875% convertibles.

The exact cash amount will depend on the volume-weighted average price of the company's shares on the Oslo Stock Exchange on Dec. 16 and Dec. 17.

Seadrill shares closed at $32.65 (NYSE: SDRL) on Dec. 15, compared with a current conversion price of $29.09 for the 3.625% convertibles and $22.65 for the 4.875% convertibles.

The company said it decided to offer an accelerated conversion to the bondholders because the current share price is materially higher than the conversion prices and based on the high likelihood of future conversion of these bonds.

Seadrill said an accelerated conversion will increase its financial flexibility and strengthen its ability to undertake further investments while maintaining its dividend policy.

ABG Sundal Collier, Credit Suisse Securities (Europe) Ltd. and Deutsche Bank AG, London Branch are the managers for the incentive offer.

Based in Hamilton, Bermuda, Seadrill is an offshore drilling contractor.

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