Boston, MA 07/09/2014 (wallstreetpr) – Efforts by Seadrill Ltd (NYSE:SDRL) to raise up to $1 billion in bond offering suffered a blow, forcing the company to pull back on the plan. The last minute withdrawal of the bond offering was linked to the adverse development on the stock on the day of the bond offering.
Share price dropped overnight, falling more than 5 percent to $37.53 apiece yesterday, putting strain on the conversion price for the bonds.
The company said the movement in the stock price was an unattractive development in terms of the conversion price of the bonds.
Putting the money to use
The company planned to offer bonds worth $1 billion that mature in five years. The money would have been used on newbuild program, retirement of earlier papers and other general corporate purposes.
Seadrill Ltd (NYSE:SDRL) tapped Deutsche Bank, BNP Paribas and ABG Sundal Collier to act as joint book runners in the bond offering.
Not a requirement
Seadrill Ltd (NYSE:SDRL) played down the challenge in the bond offering saying that its balance sheet is already in good shape, and the offering was not a requirement. Instead an opportunity to raise more money.
The company told investors in a statement that it would have a cash balance of about $1.5 billion by the end of this month following successful transactions. In view of its strong cash position, Seadrill Ltd (NYSE:SDRL) did not consider the fundraiser as a necessity.
Earlier this month, Seadrill Ltd (NYSE:SDRL) announced that its joint venture with SapuraKencana Petroleum Berhad, had started work on a pipe-laying project in a contract from Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR). The contract has an initial life of five years with potential revenue in the neighborhood of $145 million. The joint venture has the option to extend the life of the contract with Petroleo for another five years.
Seadrill Ltd (NYSE:SDRL) has not fared well in the past quarters. Its 1Q2014 earnings were 59 cents, missing the consensus of Zacks analysts by 11 cents.