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Seadrill launches conversion incentive period for 3.625%, 4.875% bonds
By Angela McDaniels
Tacoma, Wash., Dec. 16 - Seadrill Ltd. began a conversion incentive period for holders of up to $250 million of its $1 billion of 3.625% convertible bonds due 2012 and for all holders of its $500 million of 4.875% convertibles due 2014, according to a company news release.
Holders who convert their bonds into shares will receive a cash payment of about $8,500 per $100,000 principal amount of 3.625% convertibles and about $12,750 per $100,000 principal amount of 4.875% convertibles.
The exact cash amount will depend on the volume-weighted average price of the company's shares on the Oslo Stock Exchange on Dec. 16 and Dec. 17.
If the amount of 3.625% bonds converted exceeds $250 million, the cash amount will be paid to the converting holders on a pro rata basis.
The acceptance period ends at 11:30 a.m. ET on Dec. 17.
Seadrill shares closed at $32.65 (NYSE: SDRL) on Dec. 15, compared with a current conversion price of $29.09 for the 3.625% convertibles and $22.65 for the 4.875% convertibles.
The company said it decided to offer an accelerated conversion to the bondholders because the current share price is materially higher than the conversion prices and based on the high likelihood of future conversion of these bonds.
Seadrill said an accelerated conversion will increase its financial flexibility and strengthen its ability to undertake further investments while maintaining its dividend policy.
ABG Sundal Collier, Credit Suisse Securities (Europe) Ltd. and Deutsche Bank AG, London Branch are the managers for the incentive offer.
Based in Hamilton, Bermuda, Seadrill is an offshore drilling contractor.
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