Borr Drilling Limited - Collections update Mexico

Rhea-AI Summary

Borr Drilling (NYSE: BORR) has reached an agreement with its major Mexican customer for a payment settlement of approximately $125 million for outstanding receivables. The payment, expected in the first half of February 2025, represents over 75% of the outstanding receivables with this customer as of December 31st, 2024. The collections will include a financing fee in the mid-single digit percentage range.

CEO Patrick Schorn noted that the Mexican government and PEMEX administration's commitment to establishing a sustainable supplier payment mechanism could positively impact future offshore drilling opportunities in Mexico.

Positive

• Agreement reached for $125M payment settlement
• Collection represents over 75% of outstanding receivables
• Payment expected within two weeks
• Improved payment mechanism could lead to future business opportunities in Mexico

Negative

• Collections subject to additional financing fee
• Remaining 25% of receivables still outstanding
• Previous payment delays indicate collection issues with Mexican customer

Insights

Financial Analyst

The secured $125 million payment agreement marks a pivotal development for Borr Drilling's financial health, addressing a significant concern that has weighed on the company's working capital efficiency. This resolution of over 75% of outstanding receivables will substantially strengthen the company's balance sheet and immediate liquidity position.

The mid-single digit financing fee arrangement, while representing an additional cost, is a reasonable trade-off for accelerating cash collection in an industry where working capital management is crucial. This improved cash position could enhance Borr's operational flexibility and potentially reduce its reliance on external financing.

Most significantly, the Mexican government's commitment to establishing sustainable payment mechanisms signals a broader positive shift in the region's business environment. This development could catalyze increased drilling activities in Mexican waters, benefiting not just Borr but the entire offshore drilling sector. The improved payment infrastructure might also lead to more favorable contract terms and reduced collection risks for future projects in the region.

HAMILTON, Bermuda, Jan. 30, 2025 /PRNewswire/ -- Borr Drilling Limited (NYSE: BORR) (the "Company") is pleased to announce that it has agreed with its major Mexican customer to receive payment settlement for approximately $125 million related to its outstanding receivables.

The Company expects to collect this amount in the first half of February 2025. These payments represent over 75% of the outstanding receivables with this customer as of December 31^st, 2024. These collections will be subject to an agreed financing fee in the mid-single digit percentage range.

Patrick Schorn, CEO of Borr Drilling, commented: "The commitments by the Mexican government and the PEMEX administration towards establishing a sustainable supplier payment mechanism, of which this payment ­proves, will in our opinion favorably reflect on future offshore drilling opportunities in Mexico".

Hamilton, Bermuda

30 January 2025

Forward looking statements

This press release includes forward looking statements, which do not reflect historical facts and may be identified by words such as "expects" and similar expressions and include statements relating to timing and amounts of outstanding receivable settlements, establishing of sustainable payment mechanisms of customers, future offshore drilling opportunities in Mexico and other non-historical statements. Such forward looking statements are subject to risks, uncertainties, contingencies and other factors could cause actual events to differ materially from the expectations expressed or implied by the forward-looking statements included herein, including risks related to contracting, and other risks and uncertainties described in the section entitled "Risk Factors" in our most recent annual report on Form 20-F and other filings with the Securities and Exchange Commission. Such risks, uncertainties, contingencies and other factors could cause actual events to differ materially from the expectations expressed or implied by the forward -looking statements included herein. These forward-looking statements are made only as of the date of this release. We do not undertake to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

CONTACT:

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

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SOURCE Borr Drilling Limited

FAQ

How much will Borr Drilling (BORR) collect from its Mexican customer in February 2025?

Borr Drilling will collect approximately $125 million from its Mexican customer in the first half of February 2025.

What percentage of BORR's outstanding receivables does the $125M payment represent?

The $125 million payment represents over 75% of the outstanding receivables with the Mexican customer as of December 31st, 2024.

What is the financing fee for BORR's Mexican receivables settlement?

The collections will be subject to a financing fee in the mid-single digit percentage range.

How will the Mexican payment settlement affect BORR's future business opportunities?

According to CEO Patrick Schorn, the payment settlement demonstrates a commitment to sustainable supplier payments, which could positively impact future offshore drilling opportunities in Mexico.