Vantage Drilling notes seen pricing Monday at yield in 13% area

By Paul Decklelman

New York, July 23 - Vantage Drilling Co.'s $960 million offering of five-year senior secured first-lien notes is expected to price late Monday to yield around 13%, junk market syndicate sources said on Friday.

The price talk also envisions the notes coming to market at a discount to par of around 3½ to 4 points.

The order books on the Rule 144A/Regulation S offering, which is being sold with registration rights, are scheduled to close Monday morning at 10 a.m. ET, with pricing anticipated after the market close that day.

The notes come with 2½ years of call protection. They are expected to be assigned credit ratings in the low single-B vicinity.

The notes will come to market via joint bookrunners Jefferies & Co. and Deutsche Bank Securities Inc., along with Pareto Securities as the lead manager and Johnson Rice, Arctic Capital, RS Platou Markets and Friedman Billings Ramsey as the co-managers.

Vantage, a Houston-based energy drilling company, announced on July 19 that its wholly-owned subsidiary Offshore Group Investment Ltd., would offer the notes for sale. High yield syndicate sources heard that the company had begun a roadshow that day to pitch the notes to potential investors, with that marketing campaign expected to wrap up this Monday.

Vantage said that it planned to use the deal proceeds, along with the proceeds from a concurrent offering of its ordinary shares, to among other things, fund the remaining construction payments for the Platinum Explorer, a 781-foot long DSME Ultra Deepwater Drillship being built for Vantage; the company recently signed a definitive agreement to acquire from F3 Capital the remaining 55% interest which it does not already own in Mandarin Drilling Corp., which owns the construction contract for the Platinum Explorer.

Vantage also plans to use proceeds from the bond and stock offerings to refinance outstanding debt, including the $135 million of 13½% senior secured notes issued last December by wholly-owned Vantage subsidiary P2021 Rig Co. and its existing credit facility, as well as for general corporate purposes.

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