Shelf Drilling upsizes to $1.1 billion, talks secured notes at discount to yield 10%-10¼%

By Paul A. Harris

Portland, Ore., Sept. 28 – Shelf Drilling, Ltd. upsized its offering of Shelf Drilling Holdings Ltd. senior secured notes due 2029 (B3/B-/B) to $1.095 billion from $1.075 billion, according to market sources.

The notes are talked to yield 10% to 10¼%, including approximately 2 points of original issue discount, and are set to price later on Thursday.

Official talk comes snug to early guidance, which had the deal coming with an all-in yield of 10¼%, including about 2 points of OID.

The deal, which was extensively telegraphed to investors (including high-yield bond investors in the United States), was playing to around $3.1 billion of demand on Thursday morning, according to a sellside source in New York.

The Rule 144A and Regulation S 5.5-year notes come with two years of call protection.

Approximately 7% of the notes will be subject to a mandatory redemption in $37.5 million semiannual payments beginning in October 2024. That provision will remain for the life of the notes.

Goldman Sachs International is the left bookrunner. DNB, JPMorgan, Santander and SB1 are joint bookrunners.

Arctic Securities, Clarksons Securities and Fearnley Securities are the co-managers.

The United Arab Emirates-based shallow water offshore driller plans to use the proceeds plus $55 million of proceeds from an equity offering and a $50 million term loan A to refinance $310 million of senior secured notes due November 2024 and $900 million of senior notes due February 2025.

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