Transocean extends exchange offer following successful court ruling

By Sarah Lizee

Olympia, Wash., Sept. 8 – Transocean Ltd. said wholly owned subsidiary Transocean Inc. received over $1.5 billion of validly tendered exchange notes as of Sept. 4 under its previously announced offers to exchange some existing notes for up to $750 million of new 11½% senior guaranteed notes due 2027.

Following the denial by the United States District Court for the Southern District of New York of some attempts to block the exchange offers, Transocean intends to proceed with the offers, including extending the deadline, Transocean said in a news release.

Court ruling, extension

On Sept. 2, two days prior to the initial expiration of the exchange offers, funds managed by or affiliated with Whitebox Advisors LLC, as a holder of Transocean’s 7½% senior notes due 2025, 7½% senior notes due 2026, 8% senior notes due 2027 and 6.8% senior notes due 2038, filed a complaint in the court requesting a temporary restraining order (TRO) and preliminary injunction relating to the exchange offers.

Subsequent to the filing, Whitebox and funds managed by or affiliated with Pacific Investment Management Co. LLC (Pimco), as holders together of 25.1% of the existing 2027 guaranteed notes, provided a notice of default to Transocean alleging a default under the indenture governing the existing 2027 guaranteed notes.

Both the complaint, including the request for the TRO and injunction, and the notice relate to an underlying allegation that Transocean Mid Holdings 1 Ltd., Transocean Mid Holdings 2 Ltd. and Transocean Mid Holdings 3 Ltd. should have, but did not, guarantee the existing 2025 guaranteed notes and existing 2027 guaranteed notes.

The court denied the TRO and injunction request on Sept. 3.

In addition, on Sept. 7, Transocean delivered a response to Pimco and Whitebox demanding a withdrawal of the notice.

“As a result of the interference caused by the filing of the TRO and injunction and the delivery of the notice, both of which Transocean believes are meritless, Transocean has elected to extend the exchange offers to provide eligible holders of existing notes the opportunity to continue to support Transocean and participate in the exchange offers,” the company said in the release.

Transocean extended the exchange offers to 5 p.m. ET on Sept. 9 and elected to provide withdrawal rights until the new expiration time.

Results so far

As of 11:59 p.m. ET on Sept. 4, $1.5 billion principal amount of existing notes had been tendered, consisting of:

• $37,472,000 of $184 million of 6 3/8% senior notes due 2021 (Cusip: 893830BB4) for a total consideration of $825 of new 11½% senior notes due 2027 (previously 10% notes due 2025) per $1,000 principal amount of existing notes;

• $132,138,000 of $182 million of 3.8% senior notes due 2022 (Cusip: 893830BC2) for a total consideration of $730 (previously $625) of new 11½% senior notes due 2027 (previously 10% notes due 2025) per $1,000 principal amount;

• $210,407,000 of $750 million of 7Ό% senior notes due 2025 (Cusip: 893830BK4) for a total consideration of $475 (previously $425) of new 11½% senior notes due 2027 per $1,000 principal amount;

• $168.83 million of $750 million of 7½% senior notes due 2026 (Cusip: 893830BF5) for a total consideration of $465 (previously $425) of new 11½% senior notes due 2027 per $1,000 principal amount;

• $148,945,000 of $750 million of 8% senior notes due 2027 (Cusip: 893830BL2) for a total consideration of $455 (previously) $425 of new 11½% senior notes due 2027 per $1,000 principal amount;

• $35,455,000 of $57 million of 8% debentures due 2027 (Cusip: 893817AB2) for a total consideration of $375 of new 11½% senior notes due 2027 per $1,000 principal amount;

• $35,457,000 of $35,457,000 of $88 million of 7.45% notes due 2028 (Cusip: 379352AA4) for a total consideration of $405 (previously $375) of new 11½% senior notes due 2027 per $1,000 principal amount;

• $38,823,000 of $300 million of 7% notes due 2028 (Cusip: 379352AL1) issued by Global Marine Inc. for a total consideration of $375 of new 11½% senior notes due 2027 per $1,000 principal amount;

• $194.6 million of $588 million of 7½% notes due 2031 (Cusip: 893830AF6) for a total consideration of $395 (previously $375) of new 11½% senior notes due 2027 per $1,000 principal amount;

• $388,172,000 of $1 billion of 6.8% senior notes due 2038 (Cusip: 893830AT6) for a total consideration of $375 of new 11½% senior notes due 2027 per $1,000 principal amount; and

• $110,765,000 of $300 million of 7.35% senior notes due 2041 (Cusip: 893830AZ2) for a total consideration of $395 (previously $375) of new 11½% senior notes due 2027 per $1,000 principal amount.

In each case, the consideration includes an early exchange premium of $50 of new notes that will be paid only to holders who tender their notes for exchange by the early deadline, 11:59 p.m. ET on Sept. 4, extended from 5 p.m. ET on Aug. 21. The revised early deadline is also the final expiration time.

The maximum amount of new 2027 notes that may be issued is $750 million, not including up to an additional $32 million of notes that may be issued in the previously announced separate exchange for certain committed existing notes.

Based on the applicable total consideration and the amounts tendered to date, about $682 million of new notes would be issued.

As previously reported, the terms of the new 2027 senior guaranteed notes were amended to include more restrictive covenants, including limiting the ability of the company and its subsidiaries to transfer drilling rigs and drillships to entities that are initial subsidiary guarantors of the new 2027 notes, reducing the amount of debt that can be incurred by the subsidiary guarantors and limiting the ability of Transocean to secure structurally subordinated or pari passu debt of subsidiaries.

Concurrent with the exchange offers, Transocean was also soliciting consents from holders of each series of existing notes. The consent solicitations have been terminated.

D.F. King & Co., Inc. (212 269-5550, 800 967-5051 or transocean@dfking.com) is the exchange agent and information agent.

Transocean is an offshore oil and drilling contractor based in Zug, Switzerland.

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