Seeking Alpha

Seadrill Partners in 6.1M-unit public offering, $100M private placement

  • Seadrill Partners (SDLP) -4.5% AH on news it plans a public offering of 6.1M common units; also, Seadrill (SDRL) agrees to purchase directly from SDLP at least $100M of common units via a private placement concurrent with the public offering.
  • SDRL plans to use the proceeds for general corporate purposes, which may include acquisitions, repayment of indebtedness and working capital uses.
Comments (21)
  • pkoh
    , contributor
    Comments (2) | Send Message
     
    is this good for $SDRL? we might see a drop in price tomorrow
    18 Jun 2014, 05:08 PM Reply Like
  • A Prudent Investor
    , contributor
    Comments (1192) | Send Message
     
    It looks like the offering was not well received and Seadrill had to purchase the rest. These funds are all going to Seadrill since they are getting strapped for cash.
    19 Jun 2014, 09:34 AM Reply Like
  • A Prudent Investor
    , contributor
    Comments (1192) | Send Message
     
    A shell game by a shell company.
    19 Jun 2014, 09:34 AM Reply Like
  • A Prudent Investor
    , contributor
    Comments (1192) | Send Message
     
    Seadrill is just starting to divest itself from all of the new builds on order and the retail investor is the patsy. Both SDRL and SDLP should be avoided.
    19 Jun 2014, 09:35 AM Reply Like
  • A Prudent Investor
    , contributor
    Comments (1192) | Send Message
     
    Seadrill will cut a better deal for themselves than SDLP investors who are being served Alpo.
    19 Jun 2014, 10:00 AM Reply Like
  • Marine Harvest
    , contributor
    Comments (72) | Send Message
     
    Of course you are right that this is good for SDRL, or JF would not be doing it. Notice who is buying $100 million USDs worth of the private placement.... More cash for SDRL and NADL and this is good for investors.
    18 Jun 2014, 05:30 PM Reply Like
  • King Rat
    , contributor
    Comments (773) | Send Message
     
    No specific use for this $200million?
    18 Jun 2014, 05:41 PM Reply Like
  • mulligan2
    , contributor
    Comments (79) | Send Message
     
    This is confusing, it sounds like SDRL is buying so how are they making money on this?
    18 Jun 2014, 07:22 PM Reply Like
  • SWBanks
    , contributor
    Comments (245) | Send Message
     
    Means more cashflow from SDLP to SDRL.
    18 Jun 2014, 10:06 PM Reply Like
  • Stock Market Mike
    , contributor
    Comments (2377) | Send Message
     
    6.1 million at ~$31.50 would be $192 million, so probably over $180 million in proceeds, of which about $100 million is spent on them buying units to maintain a high ownership percentage. The other $80 million... who knows?

     

    -Mike
    18 Jun 2014, 11:17 PM Reply Like
  • A Prudent Investor
    , contributor
    Comments (1192) | Send Message
     
    That's bad for SDLP investors.
    19 Jun 2014, 09:33 AM Reply Like
  • Clayton Rulli
    , contributor
    Comments (2760) | Send Message
     
    musical chairs. invent a couple more seats let the music play longer
    18 Jun 2014, 11:03 PM Reply Like
  • gardesign
    , contributor
    Comments (144) | Send Message
     
    down 4.5% after hours, doesn't seem that everyone agrees this is good for SDRL.

     

    Long term, maybe....I trust JF, but harsh to see after just starting to recover from recent weakness.
    19 Jun 2014, 12:19 AM Reply Like
  • b3player
    , contributor
    Comments (287) | Send Message
     
    "down 4.5% after hours,"

     

    That is for SDLP not SDRL.
    19 Jun 2014, 02:13 AM Reply Like
  • mapodga
    , contributor
    Comments (3672) | Send Message
     
    good for SDRL, apparently not so good for SDLP :)
    SDRL growing in Norway today
    19 Jun 2014, 06:38 AM Reply Like
  • A Prudent Investor
    , contributor
    Comments (1192) | Send Message
     
    That means Seadrill's ownership in SDLP is getting hurt as well. The pro SDRL investors do not understand finance.
    19 Jun 2014, 09:33 AM Reply Like
  • Capt Jack Daniels
    , contributor
    Comments (1427) | Send Message
     
    So much for the theory that SDRL would tank come the open. It didn't.
    19 Jun 2014, 09:40 AM Reply Like
  • A Prudent Investor
    , contributor
    Comments (1192) | Send Message
     
    Seadrill should be trading at the same price of SDLP. A 8 point implied premium is ridiculous.
    19 Jun 2014, 11:58 AM Reply Like
  • Trader909
    , contributor
    Comments (17) | Send Message
     
    If SDRL should be trading at same price to SDLP then it would be trading at ~$64.00. Full-payout companies are priced on yield. SDLP's yield is about 6%. Looks like you have finally become a bull!
    25 Jun 2014, 08:38 AM Reply Like
  • Capt Jack Daniels
    , contributor
    Comments (1427) | Send Message
     
    Cheese with that whine.
    20 Jun 2014, 05:09 PM Reply Like
  • Trader909
    , contributor
    Comments (17) | Send Message
     
    Same trade would have happened in a month or so, but the impending RIG MLP accelerated the timeline. A partial interest in the West Jupiter will be sold to the MLP. So SDRL's not effectively buying new units in SDLP. It is simply substituting the eventual rollover equity contribution from the West Jupiter into the MLP today for a refund of that cash tomorrow, i.e. when the acquisition is announced, the MLP will refund SDRL the $100mm in exchange for the partial equity interest in the Jupiter. Reasonable to ask why did they hit the market now without announcing the actual sale of West Jupiter? SDRL obviously caught wind of Transocean's imminent MLP (RIGP) IPO. So in the ultimate expression of gamesmanship, SDRL says OK I will take up some of that investor appetite just as Transocean is about to hit the market to sell $350mm in RIGP units to the same SDLP investors. Think of it like a shot across the bow of Transocean in two ways. 1) It reminds Transocean that SDRL has the institutional following to raise $200mm of new equity overnight; and 2) It must have created some friction between Transocean and their lead bookrunner just before marketing. Think of the conversation between Morgan Stanley and Transocean given 5 days prior to making public RIG's MLP IPO, the lead left bookrunner places $200mm of new equity in the only other publicly traded offshore drilling MLP. All strategic gamesmanship.
    25 Jun 2014, 08:25 AM Reply Like
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