Seadrill cancels $1B debt issue after steep slide in share price

Seadrill (SDRL) +4.4% premarket after scrapping plans for a $1B convertible bond issue after shares slid 5.2% yesterday, saying the debt issue had been an "opportunity," not a need, and that it would have a ~$1.5B cash balance at the end of July.

SDRL says that although the order book was covered, the sharp price drop led to an unattractive conversion price for the issue.

The offshore rig firm had said it planned to use the proceeds from the bond issue to fund its new-build program and for general corporate purposes.

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Comments (9)
  • captain jim
    , contributor
    Comments (11) | Send Message
    I wonder when the market is going to realize that financial maneuvering is one of John Freiderickson's many talents. I personally thought the conversion bond was excellent for us, and could not understand the markets major negative reaction. Today's comments by John about the conversion cancellation proved him right again, as usual. Captain Jim.
    9 Jul 2014, 08:04 AM Reply Like
  • A Prudent Investor
    , contributor
    Comments (1192) | Send Message
    What is Seadrill going to do now Captain Jim? They have $18 billion in debt maturing within 3 years with limited access to public debt. The $650 million in convertible debt is trading at 150% of par so the company cannot buy back the notes in the market and the conversion will cause 23 million shares to be issued with additional $93 million of potential annual dividends. Raising $1 billion is convertible debt is far short of what the company needs to raise to support its obligations. A dividend cut and large equity raise is inevitable.
    9 Jul 2014, 09:48 AM Reply Like
  • Joe Lunchbox
    , contributor
    Comments (711) | Send Message
    >Today's comments by John about the conversion cancellation proved him right again, as usual. Captain Jim. <


    Is there a link to those comments? Thanks.
    9 Jul 2014, 03:57 PM Reply Like
  • A Prudent Investor
    , contributor
    Comments (1192) | Send Message
    A failed offering reflects talent. Frontline implosion reflects talent.
    9 Jul 2014, 06:49 PM Reply Like
  • Leftfield
    , contributor
    Comments (4070) | Send Message
    Been a lot of pump articles on SDRL lately, lauding it's spending-intensive acquisition of more and newer everything for all occasions. The dump may have come prematurely as it did spike the latest binge in company plans.
    9 Jul 2014, 08:06 AM Reply Like
  • fandangle
    , contributor
    Comments (3) | Send Message
    What is not to like about this share ? As a British investor I see an excellent opportunity here for a long term holding. Great Country/currency. Great dividend. And in a business that will be needed more and more and for many years to come.
    9 Jul 2014, 08:46 AM Reply Like
  • jsilliman
    , contributor
    Comments (5) | Send Message
    I'm glad I bought some more shares on the dip. Hope you all did, too.
    9 Jul 2014, 09:30 AM Reply Like
  • sethmcs
    , contributor
    Comments (3572) | Send Message
    The message is SDRL has too much debt. I think management got the message.
    9 Jul 2014, 09:32 AM Reply Like
    , contributor
    Comments (6700) | Send Message
    I guess YOU can have it both ways.
    9 Jul 2014, 12:11 PM Reply Like
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