Borr Drilling Limited - Announces Pricing of Additional $200 Million Offering of 10.000% Senior Secured Notes due 2028

Rhea-AI Summary

Borr Drilling Limited announces the pricing of an additional $200 million senior secured notes offering due 2028 by its subsidiary, Borr IHC Limited, to be used for general corporate purposes.

Financial Analyst

The issuance of an additional $200 million in senior secured notes by Borr Drilling Limited represents a strategic financial maneuver aimed at strengthening the company's capital structure. The high interest rate of 10.000% signifies a substantial cost of capital, which could be indicative of a higher risk profile associated with the company or the industry sector. Investors and analysts would need to scrutinize the company's debt-to-equity ratio post-issuance, as an increase in leverage could affect the company's financial flexibility and credit ratings.

Moreover, the intended use of proceeds for general corporate purposes, including capital expenditures and optimization of shipyard newbuild financing, suggests an aggressive growth strategy. This might be viewed favorably if the investments lead to improved operational efficiencies and increased revenue streams. However, the capital-intensive nature of the drilling industry and the volatility in commodity prices could affect the return on these investments. Stakeholders should closely monitor the deployment of these funds to ensure they are allocated to projects that yield the highest returns.

Market Research Analyst

From a market perspective, Borr Drilling Limited's additional notes offering could signal confidence to the market regarding the company's growth prospects. The successful issuance of additional debt at a significant interest rate might reflect investor appetite for higher-yield debt instruments, despite the potential risks. It's essential to evaluate the market's reception of this offering, as it could influence the company's ability to raise capital in the future.

Furthermore, the impact on Borr Drilling's stock price will depend on market perception of the company's ability to manage its increased debt load while investing in growth initiatives. If the market views the company's strategy as sound and likely to lead to increased profitability, the stock could see a positive impact. Conversely, if there are concerns about the company's debt levels or the efficacy of its investment strategy, there could be negative pressure on the stock price.

Energy Sector Analyst

In the context of the energy sector, the decision by Borr Drilling Limited to issue additional senior secured notes may reflect broader trends in the oil and gas industry. The sector requires significant capital investment to maintain and expand operations, particularly in the offshore drilling market where Borr operates. The focus on financing newbuild rigs and activating them indicates an anticipation of increased demand for drilling services, possibly linked to a bullish outlook on oil prices or a strategic move to capture market share.

However, the energy sector is subject to regulatory changes and environmental considerations that could impact the long-term sustainability of such investments. Stakeholders should consider the potential implications of a transition to renewable energy sources and any regulatory risks that may arise as a result of environmental policies. The alignment of Borr Drilling's strategy with these factors will be crucial in determining the long-term success of their investments.

HAMILTON, Bermuda, Feb. 27, 2024 /PRNewswire/ -- Borr Drilling Limited (the "Company") (NYSE and OSE: BORR) announced today that its wholly-owned subsidiary Borr IHC Limited has priced an offering of an additional $200 million in aggregate principal amount of 10.000% senior secured notes due 2028 (the "Additional Notes").

The Additional Notes will have the same terms and conditions as the $1,025,000,000 aggregate principal amount of senior secured notes due 2028, which were issued on November 7, 2023 (the "Original 2028 Notes"). The Additional Notes mature on November 15, 2028. The Additional Notes will be treated as additional notes under the indenture and will be issued bearing the same ISIN and common codes as the Original 2028 Notes, and will be fully fungible and constitute a single series with the Original 2028 Notes.

The proceeds from the offering are intended to be used for general corporate purposes, which may include, among other things, capital expenditures, including delivery costs for newbuild rigs on order, costs in connection with activations of these rigs, optimization of the shipyard newbuild financing currently in place and select asset additions, or funding of our working capital.

Settlement of the notes offering is expected on or about March 12, 2024, and is subject to customary closing conditions.

This information is considered to be inside information pursuant to the EU Market Abuse Regulation and subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

Important note

This announcement is not being made in or into Canada, Australia, Japan, Hong Kong or in any other jurisdiction where it would be prohibited by applicable law. This distribution is for information purposes only and does not constitute or form part of an offer or solicitation of an offer to purchase or subscribe for securities in the United States or in any jurisdiction in which, or to any persons to whom, such offering, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any jurisdiction. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933 (the "U.S. Securities Act") or applicable state securities laws, and may not be offered or sold in the United States or to U.S. persons unless such securities are registered under the U.S. Securities Act, or an exemption from the registration requirements of the U.S. Securities Act is available.

Forward looking statements

The press release includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, including the expected closing date of the Additional Notes offering, the use of proceeds and other non-historical statements. These forward-looking statements are subject to numerous risks, uncertainties and assumptions, including risks relating to the closing of the Additional Notes and use of proceeds and other risks included in our filings with the Securities and Exchange Commission including those set forth under "Risk Factors" in our annual report on Form 20-F for the year ended December 31, 2022 and in prospectuses filed with the Norwegian Financial Supervisory Authority (FSA). Forward-looking statements reflect knowledge and information available at, and speak only as of, the date they are made. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date hereof or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on such forward-looking statements.

February 27, 2024

The Board of Directors

Borr Drilling Limited

Hamilton, Bermuda

CONTACT:

Questions should be directed to: Magnus Vaaler, CFO, +44 1224 289208

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SOURCE Borr Drilling Limited

What is the purpose of the $200 million senior secured notes offering by Borr Drilling Limited?

The proceeds from the offering are intended for general corporate purposes, including capital expenditures, delivery costs for newbuild rigs, activation costs, shipyard newbuild financing optimization, select asset additions, or funding of working capital.

When do the Additional Notes mature?

The Additional Notes mature on November 15, 2028.

What are the terms and conditions of the Additional Notes?

The Additional Notes will have the same terms and conditions as the Original 2028 Notes issued on November 7, 2023.

How will the proceeds from the offering be utilized?

The funds raised will be used for various purposes such as capital expenditures, delivery costs for newbuild rigs, activation costs, shipyard newbuild financing optimization, select asset additions, or funding of working capital.