Seadrill holders to convert $742.9 million 3.625%, 4.875% bonds under early conversion offer

By Angela McDaniels

Tacoma, Wash., Dec. 20 - Seadrill Ltd. said holders of $603.6 million of its $1 billion of 3.625% convertible bonds due 2012 and $492.9 million of its $500 million of 4.875% convertibles due 2014 accepted the company's incentive offer to convert.

The company will accept for early conversion $250 million of the 3.625% convertibles and $492.9 million of the 4.875% convertibles.

As previously reported, the company offered a cash incentive to holders of up to $250 million of the 3.625% convertibles and to holders of all of the 4.875% convertibles. Because the amount of 3.625% convertibles offered for conversion exceeded the cap, they are subject to a proration factor of 41.4%.

The offer began Dec. 16, and the acceptance period ended at 11:30 a.m. ET on Dec. 17.

Holders who offered to convert their bonds into shares will receive a cash payment of $9,988.59 per $100,000 principal amount of 3.625% convertibles and $13,347.53 per $1,000 principal amount of 4.875% convertibles.

The company expected the cash amount to be about $8,500 for the 3.625% convertibles and about $12,750 for the 4.875% convertibles. The exact amount was calculated using the volume-weighted average price of the company's shares on the Oslo Stock Exchange on Dec. 16 and Dec. 17, which was $32.0397.

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 also noted that under the terms of the 4.875% convertibles, it is allowed to call the remaining convertibles at par plus accrued interest if 90% or more of the original issued amount has been redeemed or converted into shares.

ABG Sundal Collier, Credit Suisse Securities (Europe) Ltd. and Deutsche Bank AG, London Branch were the managers for the incentive offer.

Seadrill is an offshore drilling contractor based in Hamilton, Bermuda.

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