Songa gets backing to amend 2% convertibles for Transocean exchange

By Susanna Moon

Chicago, Jan. 10 – Songa Offshore SE secured the needed support to amend its 2% subordinated convertible bonds due 2022 at a meeting held Wednesday in connection with the exchange being offered by Transocean Ltd.’s Transocean Inc. for Songa shares.

There were enough holders to form a quorum, and the measure garnered 100% of the votes cast, according to a notice by Nordic Trustee AS.

The proposed amendments were announced Dec. 21, along with the offer for shares and exchangeable bonds by Transocean for the common shares of Songa and private exchange offers in which it will offer exchangeable bonds for various debts of Songa.

The company noted that holders of more than 90% of these bonds have agreed to convert their holdings, which means Songa will be able to exercise the clean up call for any that remain outstanding.

To facilitate the offer, Songa is seeking to make changes to the bond agreement that will waive the change-of-control event that will be triggered by the transaction and the provisions for exercising the clean up call. It also wants to add a deemed exercise of all conversion rights that have not been voluntarily exercised by the date of the Transocean general meeting of shareholders to approve the transactions.

Holders of more than two-thirds of the bonds had agreed to support the changes.

For Songa’s common shares, Transocean is offering 0.35724 of a Transocean Ltd. share and $2.99726 principal amount of 0.5% exchangeable senior bonds due 2023 for each Songa common share.

Songa shareholders may also choose to receive NOK 47.50 cash per share up to a maximum of NOK 125,000 per shareholder for some or all of their consideration.

The payment on offer is based on a price of NOK 47.50 per Songa share, a 37% premium to the five-day average closing price of NOK 34.68 on Aug. 14, the last trading day before Transocean announced its offer.

Songa is valued at NOK 9.1 billion on this basis.

The exchangeable bonds will be issued by Transocean Inc. and exchangeable into Transocean Ltd. shares.

The exchangeables will have an initial exchange rate of 97.29756 Transocean shares per $1,000 principal amount, a price of $10.27 per share and equivalent to an exchange premium of 22.5%.

They will be non-callable.

Up to $575,803,000 of the exchangeables will be issued for Songa stock.

The offer ends at 10:30 a.m. ET on Jan. 23.

Completion is subject to at least 90% of Songa’s shares being tendered.

In addition to the offer for Songa’s shares, Transocean Inc. entered into private exchange agreements under which it will issue a further $273.5 million of the exchangeable bonds in exchange for some of Songa’s debt.

Specifically, Transocean will issue the exchangeables for NOK 1,206,000,000 of Songa’s SONG04 bonds from three bondholders at a price of 103.5% per bond plus accrued interest, NOK 587 million of Songa’s SONG05 bonds from two bondholders at a price of 101% per bond plus accrued interest, and a $50 million loan from Perestroika AS to Songa at a price of 100% of the principal amount plus accrued interest.

The precise amounts of exchangeables to be issued will depend on the accrued interest at the time the exchanges close and the Norwegian krone to dollar exchange rate.

Following the closing of the acquisition of Songa, Transocean plans to redeem the remaining SONG04 and SONG05 bonds.

Songa is an offshore drilling company based in Oslo and Limassol, Cyprus. Transocean is a Houston-based offshore contract driller with a registered office in Zug, Switzerland.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.