By Paul A. Harris
Portland, Ore., Sept. 28 – Shelf Drilling, Ltd. priced an upsized $1.095 billion issue of Shelf Drilling Holdings Ltd. 9 5/8% 5.5-year senior secured notes (B3/B-/B) at 98.184 to yield 10 1/8% on Thursday, according to market sources.
The issue size increased from $1.075 billion.
The yield printed in the middle of the 10% to 10¼% yield talk. The issue price came in line with discount talk of approximately 2 points. Early guidance had the notes 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.
Goldman Sachs International was the left bookrunner. Joint bookrunners were DNB, JPMorgan, Santander and SB1.
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 unsecured notes due February 2025. Incremental proceeds resulting from the $20 million upsize of the deal will be used to offset the original issue discount.
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.
Issuer: | Shelf Drilling Holdings, Ltd.
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Amount: | $1.095 billion, increased from $1.075 billion
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Issue: | Senior secured notes
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Maturity: | April 15, 2029
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Left bookrunner: | Goldman Sachs International
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Joint bookrunners: | DNB, JPMorgan, Santander and SB1
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Co-managers: | Arctic Securities, Clarksons Securities and Fearnley Securities
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Coupon: | 9 5/8%
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Price: | 98.184
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Yield: | 10 1/8%
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Spread: | 541 bps
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Call protection: | Two years
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Trade date: | Sept. 28
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Settlement date: | Oct. 13
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Ratings: | Moody’s: B3
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| S&P: B-
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| Fitch: B
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Distribution: | Rule 144A and Regulation S
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Price talk: | 10% to 10¼%, including approximately 2 points OID
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Marketing: | Roadshow
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