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Offshore Drilling Firm Ensco Receives Commitments to Extend Revolving Credit Facility in Conjunction with Pending Acquisition of Atwood Oceanics
Thursday 28 September 2017

28 September 2017 - UK-based offshore drilling services company Ensco plc (NYSE: ESV) has received commitments from lenders to extend the maturity date of its revolving credit facility by two years to 30 September 2022 from 30 September 2020 on an unsecured basis, which would provide additional liquidity and financial flexibility following the company's pending acquisition of US-based offshore drilling provider Atwood Oceanics, Inc. (NYSE: ATW), the company said on Thursday.

If an amendment is executed, availability under the facility would be USD 1.2bn from 1 October 2019 to 30 September 2022, an increase from USD 1.1bn under Ensco's current revolving credit facility and a two-year extension from the current facility's expiration.

Under the amendment, Ensco would have borrowing capacity of USD 2bn through 30 September 2019 as compared to USD 2.25bn under current terms.

The amendment would provide for additional guarantees from certain Ensco entities and would include certain additional restrictions on Ensco and its subsidiaries.

This deal was announced on 30 May 2017. Under the deal, Ensco will acquire Atwood in a stock transaction.

Under terms of the merger agreement, Atwood shareholders will receive 1.60 shares of Ensco for each share of Atwood common stock for a total value of USD 10.72 per Atwood share based on Ensco's closing share price of USD 6.70 on 26 May 2017.

Ensco will hold a general meeting of shareholders on 5 October, while Atwood's 2017 special meeting of shareholders is also scheduled for 5 October 2017.

Completion of the merger remains subject to satisfaction or waiver of certain other conditions, including approval by the shareholders of both Ensco and Atwood.

The definitive merger agreement was unanimously approved by each company's board of directors.
Ensco said it expects to realise annual pre-tax expense synergies of approximately USD 65m for full year 2019 and beyond. The combination is expected to be accretive on a discounted cash flow basis.

Adjusted for the expected retirement of Atwood's outstanding revolving credit facility with cash and short-term investments on hand, total available liquidity was USD 3.9bn on 31 March 2017 and included USD 1.6bn of cash and short-term investments.

The estimated enterprise value of the combined company is USD 6.9bn, based on the closing price of each company's shares on 26 May 2017. The combined company will have approximately USD 3.7bn in revenue backlog.

The company said the acquisition enhances its high-specification floater and jackup fleets, adding technologically advanced drillships and semisubmersibles, and refreshing its jackup fleet to be positioned for the market recovery.

The acquisition will strengthen Ensco's position as an offshore driller with exposure to deep- and shallow-water markets that span six continents.

Upon closing, Ensco said it will add six ultra-deepwater floaters, including four drillships and five high-specification jackups.

The combined company will have a fleet of 63 rigs, comprised of ultra-deepwater drillships, versatile deep- and mid-water semisubmersibles and shallow-water jackups, along with a diverse customer base of 27 national oil companies, supermajors and independents.

Ensco plc provides offshore drilling services to the petroleum industry. The company has a presence in offshore basins across six continents.

Atwood Oceanics, Inc. is engaged in the drilling and completion of exploration and development wells for the global oil and gas industry. The company currently owns nine mobile offshore drilling units and is constructing two ultra-deepwater drillships.

Morgan Stanley and Co. LLC is lead financial advisor to Ensco. DNB Markets, part of DNB Bank ASA and HSBC Securities Inc. also provided financial advice to Ensco. Ensco's legal advisor is Latham Watkins LLP. The financial advisor for Atwood is Goldman Sachs and Co. LLC and its legal advisor is Gibson, Dunn and Crutcher LLP.
Date Published: 28/09/2017
Target: Atwood Oceanics, Inc
Country: USA
Deal Size: 6.9bn (USD)
Sector: Petroleum/Natural Gas/Coal
Type: Corporate acquisition
Financing: Stock
Status: Agreed
Buyer: Ensco plc
Buyer Advisor: Morgan Stanley and Co , DNB Markets , Latham Watkins LLP