Atwood persists at de-levering, seeks to further stagger maturities

By Devika Patel

Knoxville, Tenn., Feb. 6 – Atwood Oceanics, Inc. will continue its strategy of looking for opportunities to de-lever further or stagger its debt maturities.

The company also is keeping an eye on its revolving credit facility’s upcoming maturity in 2019 and will watch capital markets to gain more access to capital for further de-levering or staggering of maturities.

“We bought back bonds at a discount in 2016 in an effort to de-lever opportunistically and we continue to watch the capital markets for opportunities to stagger maturities,” senior vice president and chief financial officer Mark Smith said on the company’s first quarter earnings conference call on Monday.

“Atwood will continue to be opportunistic by utilizing our capital structure playbook to increase liquidity, reduce debt and/or stagger debt maturities in order to reduce the company’s refinancing risk and maintain financial flexibility as we look forward to participating in the offshore drilling market’s recovery.

“We have created $431 million of liquidity, reducing our reliance on the revolving credit facility’s capacity,” Smith said.

“We remain focused on ensuring that our balance sheet remains in good shape as we approach our revolving credit facility maturity date in mid-2019,” president and chief executive officer Rob Saltiel added on the call.

Smith remarked that the company has not yet finished its strategy of de-levering or staggering maturities.

“We’re going to opportunistically monitor capital markets to consider more capital access for further de-levering or staggering of maturities between now and mid-2018 when we will obviously be in the refinancing window for the revolving credit facility,” Smith said.

“Many capital markets appear to be re-opening so we will have several options in front of us,” he noted.

“I think the good news of this is that we’ve made tremendous progress over the last 90 days and the wind does seem to be at our back to some degree with regard to opportunities that are out there,” Saltiel added to Smith’s remarks on the balance sheet, de-levering and debt levels.

“Just look at where our bonds are trading, obviously they’re in a much stronger position that they were six months ago.

“You’ve seen some of our competitors go to the public debt market so the options are available to us.

“We want to be thoughtful in terms of which plays from the playbook we pursue next.

“I feel much better about our opportunities going forward with the balance sheet, demonstrating that we can continue to be well financed and work our way through the remainder of this downturn,” Saltiel said.

The Houston-based offshore drilling company saw total debt increase to $1.3 billion in the first quarter from $1.2 billion at the end of the fourth quarter.

Cash on hand as of Dec. 31 was $160 million and the amount drawn under Atwood’s revolving credit facility at Dec. 31 increased to $850 million compared to $780 million as of Sept. 30, leaving $545 million available under the revolver.

This resulted in liquidity of $705 million on Dec. 31 versus $760 million at Sept. 30.

After Dec. 31, the company conducted a sale of stock; the $181.1 million net proceeds of the deal may be used in part to pay down borrowings under its credit facility.

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