Archer Surges as Unit Sale Strengthens Balance Sheet: Oslo Mover

Archer Ltd. (ARCHER), an oilfield services provider, rose the most in more than three years in Oslo as the sale of a North American rental and tubular unit strengthened its balance sheet and helps to avoid a breach of debt rules.

The Hamilton, Bermuda-based company gained as much as 18 percent, the most since Jan. 8, 2010, and traded up 13 percent at 4.51 kroner by 10:36 a.m. About 2.97 million shares traded, 60 percent more than the three-month average daily volume.

Archer, 39.6 percent-owned by Seadrill Ltd. (SDRL), has been in talks with banks and shareholders after it breached covenants on credit facilities. The company had been expected by analysts to sell assets or issue shares to cut debt, which was $1.2 billion at the end of December, its latest quarterly report showed.

The $244 million sale to an affiliate of Clearlake Capital Group “will allow Archer to remain within its debt covenants and significantly increase financial flexibility,” said Turner Holm, an RS Platou Markets AS analyst. “More importantly we think this transaction is highly accretive on a cash basis.”

Archer will use “the majority of the proceeds” from the cash sale to pay down debt, it said, adding that the transaction is expected to close in June. The company is scheduled to announce its first-quarter results on May 31.

Archer will have net debt of about $912 million at the end of the first quarter and $683 million at the end of the second quarter when the sale has been completed, Holm said.

“We would be buyers on the news,” he wrote in an e-mail.

To contact the editor responsible for this story: Alastair Reed at areed12@bloomberg.net

To contact the editor responsible for this story: Christian Wienberg at cwienberg@bloomberg.net

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