Oil rig owner Borr to delay debt repayment, plans stock issue

OSLO: Oil rig operator Borr Drilling Ltd has agreed with lenders to postpone the deadline for repayment of some of its debt, and aims to raise capital through equity as it seeks to overcome a demand slump, the company said late Tuesday.

Borr, which is dual listed in Oslo and New York, reached a deal with banks as well as lender Hayfin Capital Management to push debt repayments of Us$595mil into 2023 from 2022 and to ease a minimum liquidity requirement, it said.

The plan rests on a commitment to raise between Us$40mil and Us$50mil in new equity at a subscription price of US$0.7 per share, a 2.8% discount to its Wall Street closing on Tuesday.

Borr has secured investor commitments for some Us$30mil of the share issue, and may use some of the proceeds to buy back convertible debt, the company added.

“This will strengthen the balance sheet ahead of possible industry consolidation,” Borr said in a statement.

It will also ask yards to accept extension of payment deadlines.

“We are confident that with this agreement and the continued support of the yards, we are creating a long-term solution, with low cash-breakeven for the coming years,” newly appointed chief executive Patrick Schorn said.

Founded in the wake of the 2014-2016 oil price crash, Borr acquired a fleet of 30 modern rigs in a bet that the market for drilling and exploration would rebound in the following years.

But while its shares rose following a late2016 stock market listing, they are down 92% so far this year as rig demand plunged amid the Covid-19 outbreak.

Competitor Seadrill on Sept 16 agreed with creditors to suspend interest payments, following similar announcements of debt restructuring by other rig firms earlier this year.

Borr is an international drilling contractor to the oil and gas industry, with the ambition of acquiring and operating modern drilling assets.

“We are confident that with this agreement and the continued support of the yards, we are creating a long-term solution.” Patrick Schorn