Troll Drilling seeks consents to amend 13¾% bonds, issue more of them

By Angela McDaniels

Tacoma, Wash., July 2 - Troll Drilling & Services Ltd. is seeking bondholder approval to issue $20 million of additional 13¾% senior secured callable bonds due 2016, according to a notice from bond trustee Norsk Tillitmann ASA.

The company issued $60 million of the bonds in August 2011. The additional bonds would be issued at 92% of par.

The company is also seeking amendments to the bond agreement that include the postponement of the $4 million installment payment due Aug. 19. It is offering a 3% consent fee payable no later than Aug. 15.

Troll said the additional funding combined with the postponement of the installment will give it enough liquidity to finance the upgrade of its support rig Troll Solution and to provide working capital until the rig starts to generate revenue.

BP plc has signed a contract for use of the rig in the North Sea. If the rig is not installed by Dec. 31, the company will seek to sell it and repay the bonds with the proceeds. If the rig is sold by Dec. 31, 2013, the company will pay par; otherwise it will pay 108% of par.

Amendments

Under the proposed amendments, the bonds would be repaid in 13 quarterly installments of $2.67 million each instead of semiannual installments of $4 million each, and each installment would be made at 108% of par. The first installment date would be Feb. 19, 2013. The last installment date would be changed to Feb. 19, 2016 from Feb. 19, 2015. If any installment payment would result in the amount of outstanding bonds dropping below $40 million, the payment will be reduced to an amount that will leave $40 million outstanding.

The amendments would postpone the call option period by one year. The bonds would be callable at 108% of par from August 2014 to August 2015.

The amendments would also reduce the minimum equity ratio to 25% from 30% for the 12 months that began June 30. It would then return to 30%.

Bondholders will vote on the proposal at a meeting to be held in Oslo on July 17.

In order for the proposal to pass, at least half of the bonds must be represented in person or by proxy at the meeting, and at least two-thirds of the bonds represented at the meeting must be voted in favor of it.

The company said it received confirmations from the holders of more than two-thirds of the bonds that they will vote in favor of the proposal.

Bondholders can contact the company's financial advisers with questions. They are Fearnley Securities AS (47 22 93 63 66) and Pareto Securities AS (47 22 87 87 70).

The drilling service provider is based in Bergen, Norway.

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