Weatherford buys $532.93 million notes in oversubscribed tender offer

By Angela McDaniels

Tacoma, Wash., Oct. 21 - Weatherford International Ltd. said holders tendered $631,195,000 of notes in a tender offer that expired at 5 p.m. ET on Oct. 20.

According to a company news release, holders tendered:

• $326,931,000 principal amount, or 54.59%, of the $600 million 5.95% senior notes due June 15, 2012 issued by subsidiary Weatherford International, Inc. ("Weatherford Delaware");

• $210,267,000 principal amount, or 42.05%, of the $500 million 5.15% senior notes due March 15, 2013 issued by subsidiary Weatherford International Ltd. ("Weatherford Bermuda"); and

• $93,997,000 principal amount, or 37.6%, of Weatherford Bermuda's $250 million 4.95% senior notes due Oct. 15, 2013.

The notes are listed in order of acceptance priority level.

As previously reported, two tender offers began on Sept. 16. In the first offer, Weatherford Delaware offered to purchase any and all of its $350 million 6.625% senior notes due Nov. 15, 2011.

That offer expired on Sept. 22. Holders tendered $167,066,000 principal amount, or 47.74%, of the notes and received $1,065.75 per note plus accrued interest.

In the offer that expired on Oct. 20, the principal amount of notes to be purchased is capped at $532,934,000, which is the difference between $700 million and the principal amount of notes purchased in the first offer.

Weatherford Delaware accepted for purchase all of the 5.95% notes tendered. Weatherford Bermuda accepted for purchase $206,003,000 principal amount of the 5.15% notes tendered, which represents a pro ration factor of approximately 98%, and none of the 4.95% notes tendered.

For each $1,000 principal amount, holders will receive $1,079.79 for the 5.95% notes and $1,085.83 for the 5.15% notes. The purchase price for the 4.95% notes would have been $1,088.20.

Each of these prices includes an early tender premium of $30 per $1,000 principal amount of notes tendered by 5 p.m. ET on Sept. 29, the early tender date, and accepted for purchase.

Holders will also receive accrued interest up to but excluding the settlement date, which was expected to be Oct. 21.

The purchase prices were determined based on a fixed spread over the yield based on the bid-side price of a specified U.S. Treasury security, as calculated by the dealer managers at 2 p.m. ET on Oct. 20.

The fixed spread was 70 basis points for the 5.95% notes, 100 bps for the 5.15% notes and 140 bps for the 4.95% notes.

The reference U.S. Treasury security was the 0.375% Treasury note due Aug. 31, 2012 for the 5.95% notes and the 0.75% Treasury note due Sept. 15, 2013 for the 5.15% notes and 4.95% notes.

Pricing for the first offer was determined at 2 p.m. ET on Sept. 22 based on a reference yield using the 1.75% U.S. Treasury note due Nov. 15, 2011 plus a fixed spread of 50 bps. The reference yield was 0.339%.

Weatherford Bermuda priced $800 million principal amount of 5.125% senior notes due 2020 and $600 million principal amount of 6.75% senior notes due 2040 on Sept. 16. The proceeds were used to fund the tender offers, to repay existing short-term debt and for general corporate purposes

Deutsche Bank Securities Inc. (866 627-0391), Morgan Stanley & Co. Inc. (800 624-1808) and UBS Securities LLC (888 719-4210) were the joint lead dealer managers for the tender offers, and Global Bondholder Services Corp. (866 470-3700) was the depositary and information agent.

Weatherford is a Geneva-based oilfield services company.

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