Borr Drilling Postpones $ 1.4 Billion Debt

Borr Drilling, an offshore drilling rig contractor, has in principle agreed with its largest creditor, the Singapore shipyard, to maturate a total of $ 1.4 billion in debt from 2023 to 2025 and refinance and postpone installments. Announced that it has been reached.

The company, which warned of financial difficulties last year, had previously announced its intention to address debt maturities and commitments that are currently due in 2023.

In return for these concessions, Borr will cash out accrued expenses and capitalized PIK interest payable to the yard between 2022 and 2023, in addition to what was agreed in the January 2021 amendment. I agreed to repay. These additional payments were $ 22.4 million at the completion of the amendment agreement for deferral (including an amendment fee of $ 6.5 million), scheduled for January 2022, and an additional $ 28.6 million in late 2022. Has also been agreed to be paid. The remaining deferred yard costs and the capitalized interest originally payable in 2023 will be paid between 2023 and 2024. In addition, regular payments of cash interest and cost of capital for deferred deliveries will begin in 2023. Future net equity offerings (about 35%) to repay the amount payable to the yard. It first applies to accrued and capitalized costs and then repays the principal.

Both contracts require the approval of Yard’s Board of Directors, scheduled for mid-January 2022, and the consent of other creditors of the company.

The company will seek to raise approximately $ 30 million in new shares to cover the $ 22.4 million increase in cash payments made by the shipyard at the time the deal closes.

Based on the contract backlog, the expected rollover of the current contract, and additional contract awards up to 2022, Borr Drilling will have at least 18 rigs up and running in mid-2022, the third reported 2,000. We expect to generate a significantly higher level of adjusted EBITDA compared to $ 10,000. The 2021 quarter when 13 rigs are in operation. With no scheduled debt amortization to the yard and a reasonable interest expense level until 2025, the new debt structure ensures a low break-even point even for the company.

“Borr Drilling is very grateful for the support we received from our major creditors. This is a testament to our confidence in Borr Drilling and our confidence in the recovery of our current market. With deferred, strong operating performance of 18 rigs shrinking and further improvements in adjusted EBITDA expected, we will be able to fully benefit from the recovery of the jack-up drilling market. We believe that will benefit all stakeholders and create a long-term solution that benefits both debtors and equity holders, “said CEO Patrick Schorn.

In principle, this agreement with Yard, if approved, will allow Borr Drilling to refinance senior secured credit facilities and Hayfin facilities and convertible bonds to maturity after 2025, such refinancing until June 2022. If not completed, the maturity and postponement of delivery will revert to the current schedule. Borr Drilling said it will continue to work with these lenders to find a solution to postpone or refinance the remaining debt that is currently due in 2023 and provide the company with a complete long-term lending solution.