Seadrill Limited (NYSE: SDRL) (the "Company") announced today that it has entered into an agreement with Seadrill Partners ("Seadrill Partners") pursuant to which the Company will sell to (i) Seadrill Operating LP, the Company's 70% owned subsidiary ("Seadrill Operating"), all of the ownership interests in the entities that own and operate the semi-submersible drilling rig, the West Leo (the "Leo Dropdown"), and (ii) Seadrill Capricorn Holdings LLC, the Company's 49% owned subsidiary ("Capricorn Holdings"), all of the ownership interests in the entities that own and operate the semi-submersible drilling rig, the West Sirius (the "Sirius Dropdown"). The Leo Acquisition and the Sirius Acquisition (collectively, the "Dropdowns") will be accomplished through a series of purchases, contributions and assumptions of debt. The Dropdowns are subject to the satisfaction of certain closing conditions.
Financing of the Acquisitions
The implied purchase price of the Leo Dropdown is $1.250 billion, including working capital. The Seadrill Partners' portion of the purchase price for the Leo Dropdown will be $229.4 million. In addition, a subsidiary of Seadrill Operating intends to enter into a $485.5 million intercompany loan agreement with the Company (the "Leo Loan Agreement"), which will require it to make payments of principal and interest under the credit facility that Seadrill used, in part, to construct the West Leo.
The implied purchase price of the Sirius Dropdown is $1.035 billion, including working capital. Seadrill Partners' portion of the purchase price for the Sirius Dropdown will be $298.4 million. Seadrill Partners intends to fund $70.0 million of the purchase price by issuing a zero coupon discount note to the Company that matures in June 2015. Upon maturity of such note, Seadrill Partners will repay $72.6 million to the Company. In addition, a subsidiary of Capricorn Holdings intends to enter into a $220.1 million intercompany loan agreement with the Company, which will require Capricorn Holdings to make payments of principal and interest under the credit facility used to finance the West Sirius. In addition, Capricorn Holdings intends to finance $229.9 million of the purchase price by issuing a zero coupon discount note to the Company that matures in June 2015. Upon maturity of such note, Capricorn Holdings will repay $238.5 million to the Company.
Seadrill Partners intends to satisfy the cash portion of its purchase price of the Acquisitions with the proceeds of equity issuances and borrowings from the Company.
