SDLP - Seadrill Partners LLC agrees to acquire the semi-submersible rigs West Leo and West Sirius
December 02 2013 - 4:14PM
London, United Kingdom,
December 02, 2013 - Seadrill Partners LLC (NYSE: SDLP)
(the "Company") announced today that it has entered into an
agreement with Seadrill Limited ("Seadrill") pursuant to which (i)
Seadrill Operating LP, the Company's 30% owned subsidiary
("Seadrill Operating"), will acquire all of the ownership interests
in the entities that own and operate the semi-submersible drilling
rig, the West Leo (the "Leo Acquisition"),
and (ii) Seadrill Capricorn Holdings LLC, the Company's 51% owned
subsidiary ("Capricorn Holdings"), will acquire all of the
ownership interests in the entities that own and operate the
semi-submersible drilling rig, the West
Sirius (the "Sirius Acquisition") from Seadrill. The Leo
Acquisition and the Sirius Acquisition (collectively, the
"Acquisitions") will be accomplished through a series of purchases,
contributions and assumptions of debt. The Acquisitions are
subject to the satisfaction of certain closing conditions.
The West Leo
The West Leo is a 6th
generation, dynamically positioned semi-submersible drilling rig
that was delivered to its current customer, Tullow Oil Ghana Ltd.,
in 2012 and commenced operations off the coast of West Africa in
May 2012. The West Leo is expected to carry
out operations in West Africa until the end of its current contract
in May 2018 at a dayrate of $605,000 for operations in
Ghana.
The West Sirius
The West Sirius is a 6th
generation, dynamically positioned semi-submersible drilling rig
that was built and delivered in 2008. The West Sirius currently operates in the U.S. Gulf of
Mexico under a drilling contract with BP which expires in July
2014. Upon expiration of the current contract, the West Sirius will operate under a new contract with BP
that will expire in July 2019 at a dayrate of $535,000.
Financing of the
Acquisitions
The implied purchase price of the Leo Acquisition
is $1.250 billion, including working capital. The Company's portion
of the purchase price for the Leo Acquisition will be $229.4
million. In addition, a subsidiary of Seadrill Operating intends to
enter into a $485.5 million intercompany loan agreement with
Seadrill (the "Leo Loan Agreement"), which will require it to make
payments of principal and interest under the credit facility that
Seadrill used, in part, to construct the West
Leo.
The implied purchase price of the Sirius
Acquisition is $1.035 billion, including working capital. The
Company's portion of the purchase price for the Sirius Acquisition
will be $298.4 million. The Company intends to fund
$70.0 million of the purchase price by issuing a zero coupon
discount note to Seadrill that matures in June 2015. Upon maturity
of such note, the Company will repay $72.6 million to Seadrill. In
addition, a subsidiary of Capricorn Holdings intends to enter into
a $220.1 million intercompany loan agreement with Seadrill, which
will require it to make payments of principal and interest under
the credit facility used to finance the West
Sirius. In addition, Capricorn Holdings intends to finance
$229.9 million of the purchase price by issuing a zero coupon
discount note to Seadrill that matures in June 2015. Upon
maturity of such note, Capricorn Holdings will repay $238.5 million
to Seadrill.
The Company intends to satisfy the cash portion of
its purchase price of the Acquisitions with the proceeds of equity
issuances and borrowings from Seadrill.
Board Approval
The Board of Directors of the Company (the
"Board") and the Conflicts Committee of the Board (the "Conflicts
Committee") have approved the terms and conditions of the
Acquisitions and the concurrent private placement. The Conflicts
Committee retained a financial advisor, Global Hunter Securities,
to assist with its evaluation of the Acquisitions.
As a result of the Acquisitions, the Company's
management has recommended to the Board an increase in the
Company's quarterly cash distribution of between $0.055 and $0.0675
per common unit (or an annualized increase of between $0.22 and
$0.27 per common unit), which would become effective for the
Company's distributions with respect to the quarter ending March
31, 2014. Assuming management's recommendation is approved, the
Company's distribution will have increased by a minimum of 29%
since its initial public offering. Any such increase would be
conditioned upon, among other things, the closing of the
Acquisitions, the approval of such increase by the Board and the
absence of any material adverse developments or potentially
attractive opportunities that would make such an increase
inadvisable.
The Board is pleased that the Company has entered
into this contribution agreement with respect to its third and
fourth acquisitions since the Company's initial public offering in
October 2012. These acquisitions will significantly increase the
Company's asset diversification and should therefore reduce
earnings volatility. As with the Company's acquisitions of the
T-15 and T-16, this
acquisition is expected to be an accretive transaction and is
consistent with the Company's growth strategy. The Board believes
that the fundamental outlook for the offshore drilling industry
remains strong, and is positive about the Company's future
growth prospects.
FORWARD LOOKING
STATEMENTS
This news release includes forward looking
statements. Such statements are generally not historical in nature,
and specifically include statements about the Company's plans,
strategies, business prospects, changes and trends in its business
and the markets in which it operates. In particular, statements
regarding the Company's ability to complete the Acquisitions, its
financing of the Acquisitions and projected increases in cash
distributions are considered forward looking statements. These
statements are made based upon management's current plans,
expectations, assumptions and beliefs concerning future events
impacting the Company and therefore involve a number of risks,
uncertainties and assumptions that could cause actual results to
differ materially from those expressed or implied in the
forward-looking statements, which speak only as of the date of this
news release. Important factors that could cause actual results to
differ materially from those in the forward looking statements
include, but are not limited to, the performance of the drilling
rigs in the Company's fleet, delay in payment or disputes with
customers, fluctuations in the international price of oil, changes
in governmental regulations that affect the Company or the
operations of the Company's fleet, increased competition in the
offshore drilling industry, and general economic, political and
business conditions globally. Consequently, no forward looking
statement can be guaranteed. When considering these forward looking
statements, you should keep in mind the risks described from time
to time in the Company's filings with the SEC, including its Annual
Report on Form 20-F (File No. 001-35704). The Company undertakes no
obligation to update any forward looking statements to reflect
events or circumstances after the date on which such statement is
made or to reflect the occurrence of unanticipated events. New
factors emerge from time to time, and it is not possible for the
Company to predict all of these factors. Further, the Company
cannot assess the impact of each such factor on its business or the
extent to which any factor, or combination of factors, may cause
actual results to be materially different from those contained in
any forward looking statement.
December 2, 2013
Questions should be directed to:
Graham Robjohns: Chief Executive Officer
Rune Magnus Lundetræ: Chief Financial Officer
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Seadrill Partners LLC via Globenewswire
HUG#1747223
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