By Paul A. Harris
Portland, Ore., Jan. 17 – Transocean Inc. priced $1.175 billion of seven-year senior secured notes (B2/B-) at par to yield 8¾% in a Tuesday drive-by, according to market sources.
The yield came at the tight end of the 8¾% to 9% yield talk. Initial guidance was in the low-9% area.
Goldman Sachs was the left bookrunner. Joint bookrunners were Citigroup, DNB, Morgan Stanley, Wells Fargo, Credit Agricole and SpareBank.
The new notes will be secured by the same collateral that secures the existing secured notes, including first-lien security on all drilling rigs, earnings, receivables, insurance proceeds, intercompany receivables and accounts related to each collateral rig family: Thalassa (Deepwater Thalassa), Proteus (Deepwater Proteus), Guardian (Transocean Enabler and Transocean Encourage) and Pontus (Deepwater Pontus).
Guarantor caps, fixed through the life of the bond, include Thalassa $247 million, Proteus $256 million, Guardian $320 million and Pontus $352 million.
Proceeds from the new notes will be used to fully refinance four tranches of senior secured notes issued by Transocean subsidiaries.
The issuer will be required to fund $100 million to a debt service reserve account (DSRA) upon the settlement of the new bonds. There is an additional $75 million funding requirement to the DSRA in 2024, split semi-annually, and an additional $50 million in 2025, split quarterly.
Subject to achieving and maintaining $100 million of net debt per rig, excess funds may subsequently be released from the DSRA for the life of the notes, subject to maintaining at least six months of debt service.
The issue is also subject to a mandatory 10% annual amortization ($117.5 million) for the life of the notes.
The Switzerland-based driller returned to the primary market for the second time in just over a week on Tuesday. On Jan. 9, Transocean Titan Financing Ltd. priced a $525 million issue of amortizing 8 3/8% senior secured notes due February 2028.
| Issuer: | Transocean Inc.
|
| Amount: | $1.175 billion
|
| Issue: | Senior secured notes
|
| Maturity: | Feb. 15, 2030
|
| Left bookrunner: | Goldman Sachs
|
| Joint bookrunners: | Citigroup, DNB, Morgan Stanley, Wells Fargo, Credit Agricole and SpareBank
|
| Co-managers: | Standard Bank
|
| Coupon: | 8¾%
|
| Price: | Par
|
| Yield: | 8¾%
|
| Spread: | 523 bps
|
| Call protection: | Three years
|
| Trade date: | Jan. 17
|
| Settlement date: | Jan. 31
|
| Ratings: | Moody’s: B2
|
| S&P: B-
|
| Distribution: | Rule 144A and Regulation S for life
|
| Price talk: | 8¾% to 9%
|
| Marketing: | Drive-by
|
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