Archer Limited : Archer Limited : Financing update, equity issue, preliminary 4Q results and SGM notice Hamilton, Bermuda (January 31, 2013) Highlights *Solution with banks in place, no debt installments until November 2014 *Underwritten new equity commitment of USD 250 million *Fourth quarter preliminary revenue of USD 537 million, EBIDTA of USD 30 million after USD 14 million of two non-recurring provisions *New modular rig contract award with Statoil worth USD 115 million + options, with estimated annual EBITDA contribution of USD 30 million starting from Q4 2014 Equity issue and financing update Archer Limited (the "Company") has concluded negotiations with its lending banks and major shareholders resulting in significantly enhanced debt covenants. The proposed solution is contingent on a USD 250 million equity raise to be used to prepay Archer's November 2013 debt installment of USD 100 million and the prepayment of other debt facilities of USD 150 million. In order to avoid further dilution to existing shareholders, Seadrill will in addition give a guarantee of USD 100 million to support Archer's existing bank facilities. The solution has been designed to mitigate financing risk with no further debt installments on the main facility due until November 2014. This will lower the Company's cash break-even levels, and will leave room for the Company's planned capex investments. Archer's five largest shareholders together holding approximately 68%, are supportive of the solution. The Company intends to execute a private placement within the next week. The private placement is fully underwritten by these five shareholders at minimum USD 1 per share. The subscription price in the private placement will reflect the market price at the time of launch, with a minimum subscription price of USD 1 per share (equal to the Company's proposed adjusted par value of its shares). Preliminary estimate for fourth quarter 2012 financial results Archer's preliminary revenue for the fourth quarter 2012 is estimated at USD 537 million, compared to USD 551.9 million for the third quarter 2012. Earnings before Interest, Taxes, Depreciation and Amortization, or EBITDA, for the fourth quarter 2012 is estimated at USD 30 million net of two non-recurring items totaling USD 14 million in Argentina and Alaska. In Argentina we have not recognized revenue related to 15 rigs in the month of December as we have entered in contract negotiations for new terms and conditions starting in early 2013. We expect to come to a contractual agreement with our costumer in the first quarter. A USD 8 million loss has been recognized due to nonpayment by a costumer in Alaska. A lawsuit against the money has been filed. We strongly believe that all outstanding amounts are rightfully due. The Company has seen an increase in activity in the United States in the first quarter. In particular coil tubing, wireline and pressure pumping have seen improved utilization. The Company currently has all 5 frac fleets in operation. All businesses are still suffering from low margins. The platform drilling division will benefit from the modular rig ("Archer Emerald") in New Zealand being on full operating rate since January 1, 2013. The Company is pleased to announce that it has been awarded a second modular rig drilling contract from Statoil for the permanent plug and abandonment of twelve wells on the Heimdal platform. The start of operations is expected in the second half of 2014 and the contract duration is 34 months with four option periods of three months each. Archer is excited to secure its first Modular Rig contract in the North Sea. The award demonstrates the attractiveness of the modular rig concept which combines flexibility, efficiency, short rig-up and rig-down time, making it a unique proposition for our customers both for plug and abandonment services and production drilling from fixed offshore platforms. The total firm period contract value, including start-up phase, operating phase, and decommissioning phase is estimated at USD 115 million, with an estimated annual EBITDA contribution of USD 30 million starting from Q4 2014. As for the EMT business area, wireline activity in the United States is expected to gradually recover from a slow fourth quarter, while the integrity related technology offering continues to gain broader acceptance displaying significant growth. While the Board remains disappointed with the estimates for fourth quarter and full year 2012 results, we are pleased to have found a financial solution for Archer and its shareholders. The solution in place will allow Archer to restore its balance sheet and fully focus on operations going forward. We are cautiously optimistic by the increasing activity in our US land operations seen since the start of the year. To support the next phase of the Company's development the Board has resolved to appoint a permanent CEO over the next couple of months. Special General Meeting notice Archer's Board of Directors will call for a special general meeting to be held on or about February 13, 2013 (the "SGM") to reduce the par value of Archer's authorized and issued shares from USD 2.00 to USD 1.0 and to increase the number of authorized shares from 600,000,000 to 1,200,000,000. The amount of credit arising from the reduction of the issued share capital will be credited to the contributed surplus account of Archer. Archer will following such resolutions have an authorized share capital of USD 1,200,000,000 represented by 1,200,000,000 shares with a par value of USD 1.0 and an issued share capital of USD 366,659,120 represented by 366,659,120 shares with a par value of USD 1.0. The total number of new shares to be issued in the planned private placement will be maximum 255,000,000 shares including 5,000,000 shares as compensation to underwriters. The number of new shares will be reduced if the share price appreciates prior to the planned private placement. For further information - please contact: Fredrik Halvorsen, Chief Executive Officer and Deputy Chairman Christoph Bausch,Chief Financial Officer Lars Bethuelsen, Senior Vice-President, M&A and Investor Relations *** PLEASE NOTE: Archer announces certain preliminary estimates of its financial condition and results from operations for the three months ended December 31, 2012. These preliminary financial estimates are subject to change upon completion of the Company's year-end closing procedures that will be performed in conjunction with the preparation of the Company's annual financial statements. Any such changes could be material. These preliminary estimates are not intended to be, and should not be construed as a comprehensive statement of the Company's financial condition or results for the three months and year ended December 31, 2012. Actual results may ultimately materially differ. This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act. ------------------------------------------------------------------------------ This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Archer Limited via Thomson Reuters ONE HUG#1674754
Archer Limited : Archer Limited : Financing update, equity issue, preliminary 4Q results and SGM notice
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