Pacific Drilling Announces Closing of $1.0 Billion Aggregate Principal Amount Senior Secured Notes
Pacific Drilling S.A. (OTC: PACDQ) (“Pacific Drilling” or the “Company”)
today announced the closing of its previously announced private offering
of $1.0 billion aggregate principal amount of senior secured notes,
consisting of $750 million aggregate principal amount of 8.375% First
Lien Notes due 2023 (the “first lien notes”) and $250 million aggregate
principal amount of 11.000% / 12.000% Second Lien PIK Notes due 2024
(the “second lien PIK notes” and, together with the first lien notes,
the “notes”). The net proceeds of the offerings have been funded into
separate escrow accounts (the “Escrow Accounts”) pending Pacific
Drilling’s emergence from bankruptcy.
Each series of notes was issued by a separate special purpose wholly
owned subsidiary (together, the “Escrow Issuers”) of Pacific Drilling in
connection with the restructuring of Pacific Drilling as part of the
Joint Plan of Reorganization initially filed with the U.S. Bankruptcy
Court for the Southern District of New York on July 31, 2018 and
subsequently amended (as amended, the “Plan”). If the Plan is confirmed
and certain other conditions are satisfied on or before December 22,
2018 (the date on which such conditions are satisfied, the “Escrow
Release Date”), the Escrow Issuers will merge with and into Pacific
Drilling, and Pacific Drilling will become the obligor under the notes.
On the Escrow Release Date, the notes will be jointly and severally and
fully and unconditionally guaranteed on a senior secured basis by each
of Pacific Drilling’s restricted subsidiaries (subject to certain
exceptions) and the first lien notes will be secured on a first-priority
basis, and the second lien PIK notes on a second-priority basis, by
substantially all of Pacific Drilling’s assets (subject to certain
exceptions). Prior to the Escrow Release Date, each series of notes will
be general obligations of the applicable Escrow Issuer, secured only by
a lien on the applicable Escrow Account. On the Escrow Release Date, the
net proceeds from the offerings will be released from the Escrow
Accounts to fund a portion of the payments to creditors provided for
under the Plan.
Pacific Drilling CEO Paul Reese commented, “The successful execution of
these financial transactions marks an important step in our Company’s
restructuring under the Plan. We believe the Plan will strengthen our
Company’s balance sheet by reducing its leverage and delivering a
substantial amount of new capital. Upon consummation of the Plan, we
expect our Company’s cash position will be significantly enhanced, and
we will be in a much stronger financial position to take advantage of
our dedicated, high-specification deepwater drillship fleet in
anticipation of an improving market for offshore drilling services.”
The notes and related guarantees were offered and sold in a private
placement exempt from the registration requirements of the Securities
Act of 1933, as amended (the “Securities Act”), and were offered and
sold only to qualified institutional buyers under Rule 144A of the
Securities Act, and to non-U.S. persons in transactions outside the
United States under Regulation S of the Securities Act. The notes have
not been, and will not be, registered under the Securities Act and may
not be offered or sold in the United States absent registration or an
applicable exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and other applicable
securities laws.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of the
notes in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
Credit Suisse Securities (USA) LLC acted as sole book-running manager
and initial purchaser for the notes.
Legal counsel for Pacific Drilling was Jones Walker LLP, and legal
counsel for Credit Suisse Securities (USA) LLC was Cravath, Swaine &
Moore LLP.
About Pacific Drilling
With its best-in-class drillships and highly experienced team, Pacific
Drilling is committed to becoming the industry’s preferred
high-specification, deepwater drilling contractor. Pacific Drilling’s
fleet of seven drillships represents one of the youngest and most
technologically advanced fleets in the world. Pacific Drilling has its
principal offices in Luxembourg and Houston. For more information about
Pacific Drilling, including our current Fleet Status, please visit our
website at www.pacificdrilling.com.
Forward-Looking Statements
Certain statements and information contained in this news release
constitute “forward-looking statements” within the meaning of the safe
harbor provisions of the Private Securities Litigation Reform Act of
1995, and are generally identifiable by the use of words such as
“anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,”
“intend,” “our ability to,” “may,” “plan,” “predict,” “project,”
“potential,” “projected,” “should,” “will,” “would,” or other similar
words, which are generally not historical in nature. The forward-looking
statements speak only as of the date hereof, and we undertake no
obligation to publicly update or revise any forward-looking statements
after the date they are made, whether as a result of new information,
future events or otherwise.
Our forward-looking statements express our current expectations or
forecasts of possible future results or events, including our future
financial and operational performance and cash balances; revenue
efficiency levels; market outlook; forecasts of trends; future client
contract opportunities; contract dayrates; our business strategies and
plans and objectives of management; estimated duration of client
contracts; backlog; expected capital expenditures; projected costs and
savings; the potential impact of our Chapter 11 proceedings on our
future operations and ability to finance our business; our ability to
complete the restructuring transactions contemplated by our plan of
reorganization; projected costs and expenses in connection with our plan
of reorganization; and our ability to emerge from our Chapter 11
proceedings and continue as a going concern.
Although we believe that the assumptions and expectations reflected in
our forward-looking statements are reasonable and made in good faith,
these statements are not guarantees, and actual future results may
differ materially due to a variety of factors. These statements are
subject to a number of risks and uncertainties and are based on a number
of judgments and assumptions as of the date such statements are made
about future events, many of which are beyond our control. Actual events
and results may differ materially from those anticipated, estimated,
projected or implied by us in such statements due to a variety of
factors, including if one or more of these risks or uncertainties
materialize, or if our underlying assumptions prove incorrect. There can
be no assurances that the above-described transactions will be
consummated on the terms described above or at all.
Important factors that could cause actual results to differ materially
from our expectations include: our ability to consummate the financing
transactions contemplated by the Plan on terms that will permit us to
meet our objectives; the global oil and gas market and its impact on
demand for our services; the offshore drilling market, including reduced
capital expenditures by our clients; changes in worldwide oil and gas
supply and demand; rig availability and supply and demand for high
specification drillships and other drilling rigs competing with our
fleet; costs related to stacking of rigs; our ability to enter into and
negotiate favorable terms for new drilling contracts or extensions; our
ability to successfully negotiate and consummate definitive contracts
and satisfy other customary conditions with respect to letters of intent
and letters of award that we receive for our drillships; our substantial
level of indebtedness; possible cancellation, renegotiation, termination
or suspension of drilling contracts as a result of mechanical
difficulties, performance, market changes or other reasons; our ability
to execute our business plan and continue as a going concern in the long
term; our ability to obtain Bankruptcy Court approval with respect to
motions or other requests made to the Bankruptcy Court in our Chapter 11
proceedings, including maintaining strategic control as debtor
in-possession; our ability to confirm and consummate our plan of
reorganization in accordance with the terms of the Plan and the
settlement; risks attendant to the bankruptcy process including the
effects of our Chapter 11 proceedings on our operations and agreements,
including our relationships with employees, regulatory authorities,
clients, suppliers, banks and other financing sources, insurance
companies and other third parties; the effects of our Chapter 11
proceedings on our Company and on the interests of various constituents,
including holders of our common shares and debt instruments; the
potential adverse effects of our Chapter 11 proceedings on our
liquidity, results of operations, or business prospects; the outcome of
Bankruptcy Court rulings in our Chapter 11 proceedings as well as all
other pending litigation and arbitration matters; the length of time
that we will operate under Chapter 11 protection and the continued
availability of operating capital during the pendency of the
proceedings; our ability to access adequate debtor-in-possession
financing or use cash collateral; risks associated with third-party
motions in our Chapter 11 proceedings, which may interfere with our
ability to timely confirm and consummate our plan of reorganization and
restructuring generally; increased advisory costs including
administrative and legal costs to complete our plan of reorganization
and other litigation; the risk that our plan of reorganization may not
be accepted or confirmed, in which case there can be no assurance that
our Chapter 11 proceedings will continue rather than be converted to
Chapter 7 liquidation cases or that any alternative plan of
reorganization would be on terms as favorable to holders of claims and
interests as the terms of our Plan; the cost, availability and access to
capital and financial markets, including the ability to secure new
financing after emerging from our Chapter 11 proceedings; and the other
risk factors described in our 2017 Annual Report on Form 20-F and our
Current Reports on Form 6-K available on the SEC’s website at www.sec.gov.
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