Rowan extinguishes $36 million debt in Q2, $163 million year-to-date

By Paul Deckelman

New York, Aug. 2 – Rowan Cos. plc extinguished some $36 million of debt during its recently ended 2017 second quarter, the company said Wednesday, bringing to $163 million its year-to-date debt reduction total.

“During the quarter, we repurchased a modest amount of debt,” the Houston-based global offshore contract drilling company’s president and chief executive officer, Thomas P. Burke, told analysts on a conference call following the release of results for the second quarter ended June 30.

Burke said that debt reduction “further bolstered our solid financial position.”

Rowan started out the new year taking out some $498.55 million principal amount of four series of existing junk bond debt via a tender offer that wrapped up on Jan. 3. The tender offer was partially funded from the proceeds of a $500 million offering of new 8.5-year senior notes the company and its Rowan Cos. Inc. subsidiary did in December, pricing that paper at par on Dec. 6 to yield 7 3/8%, after the regularly scheduled bond issue was upsized from an originally announced $400 million. Rowan ended up paying some $523.357 million, including tender fees and accrued interest costs.

It had been willing to repurchase up to $750 million total of those $1.85 billion of outstanding notes, arranged on a priority acceptance ladder and with prospective purchase amounts of three of the four issues capped, but the tender offer was undersubscribed.

Rowan ended up accepting for purchase all $265.68 million of the outstanding $357.73 million of its 5% senior notes due 2017 which were tendered.

It accepted all $187,591,000 of its outstanding $396.518 million of 7 7/8% senior notes due 2019 which were tendered, as the revised tender cap of $207.215 million – up from $100 million originally – was not reached.

It also accepted for purchase all $43.401 million of its $700 million of outstanding 4 7/8% senior notes due 2022 which were tendered, well under the announced $235 million tender cap, and all $1,883,000 of its $400 million of outstanding 4¾% senior notes due 2024 which were tendered, also well under the $50 million announced tender cap.

Continuing its debt-reduction efforts, the company in early January called all of its $92.11 million of outstanding 5% senior notes that were to have come due on Sept. 1 of this year for redemption on Feb. 8, via a make-whole call at a price equal to 50 basis points over comparable Treasuries.

The company offered no specific information as to its additional debt-cutting initiatives.

Rowan’s executive vice president and chief financial officer, Steven Butz, said on the conference call that “we remain highly focused on our balance sheet and liquidity runway in what may prove to be a slow market recovery.”

Butz said that Rowan ended the quarter with a cash balance of “just under $1.2 billion” – $1.15 billion, according to its financial results announcement – down slightly from $1.26 billion at the end of fiscal 2016 on Dec. 31 of that year.

Besides the cash position, Butz said that Rowan’s $1.5 billion revolving credit facility remained undrawn at the end of the second quarter.

According to the earnings announcement, the company’s balance sheet showed approximately $2.52 billion of total debt at June 30, all of it classified as long-term debt.

That was down from approximately $2.68 billion of total debt at Dec. 30, classified as $2.55 billion of long-term debt and another $126 million as the current portion of those long-term obligations.

© 2015 Prospect News.
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