Pacific Drilling Announces Closing of $2 Billion in Senior Secured Financing Transactions and Full R

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Pacific Drilling Announces Closing of $2 Billion in Senior Secured Financing Transactions and Full Repayment of Project Facilities Agreement

LUXEMBOURG--(BUSINESS WIRE)-- Pacific Drilling S.A. (NYSE: PACD) announced today the closing of three financing transactions totaling $2 billion. The transactions included an offering of $750 million in 5.375% senior secured notes due 2020, a $750 million senior secured term loan with 2018 maturity, and a $500 million senior secured revolving credit facility also maturing in 2018.

Net proceeds from the offering of the senior secured notes and the term loan were used to fully repay all $1.35 billion outstanding on our Project Facilities Agreement. The balance of the net proceeds together with approximately $150 million in releases of restricted cash from the Project Facilities Agreement will be used for general corporate purposes, primarily the initial construction payments for the Pacific Zonda. These transactions are in addition to our $1 billion Senior Secured Credit Facility, signed in the first quarter of 2013 and intended to fund the construction of the Pacific Sharav and the Pacific Meltem.

The $500 million revolving credit facility can provide up to $200 million in future incremental funding intended to support our working capital needs as our company continues to expand. The balance of $300 million is available for letters of credit that backstop our customs bonds for the temporary importation of our drillships into their operating location, including already existing customs bonds totaling $204 million for the Pacific Bora and the Pacific Scirocco.

CEO Chris Beckett commented, "The successful execution of these financial transactions marks an important milestone in our company's development. The new financings considerably strengthen our capital structure and provide us with increased financial flexibility, in addition to providing incremental liquidity to address pre-delivery payments for the Pacific Zonda's construction. On closing of the transactions, we have released restricted cash balances and removed restrictions on the internal movement of our cash, we have added a revolving credit facility providing $200 million in additional liquidity, we have cut our annual debt amortization payments by over $200 million, we have extended and laddered our debt maturity profile and we have locked in attractive interest rates. In addition to our proven expertise in arranging complex bank financing with export credit agency participation, we have now expanded our access to the capital markets and further diversified our sources of capital. Following these latest transactions we still expect to require additional external funding for the final delivery payment on the Pacific Zonda, scheduled for the first half of 2015."

The notes, term loan and revolving credit facility are secured primarily by four of our vessels, the Pacific Bora, the Pacific Mistral, the Pacific Scirocco, the Pacific Santa Ana and related assets. The $750 million in 5.375% senior secured notes due 2020 were issued at par. The $750 million senior secured term loan, which was issued at 99.5% of face value, will bear annual interest at LIBOR plus a margin of 3.50% and will include a LIBOR floor of 1.00%. Pacific Drilling can elect to apply an alternate contractually defined rate if deemed more attractive. The term loan will amortize in equal quarterly installments totaling 1% of the original principal amount of the term loan per year, with the balance payable on June 3, 2018. To address potential future volatility in short term interest rates, we have entered into a 4.5-year interest rate swap for 95% of the term loan principal amount at a cost of 1.56% per annum. During the swap's life, our annual interest rate payments for the hedged amount will be fixed at 5.06%.

The $500 million senior secured revolving credit facility also has a maturity date of June 3, 2018. Borrowings under the senior secured revolving credit facility will bear interest at LIBOR plus a margin ranging from 2.50% to 3.25% based on Pacific Drilling's leverage ratio. No amounts were drawn under the revolving credit facility in connection with the closing of the transaction. The $300 million letter of credit sublimit will bear interest on issued amounts equal to the above borrowing margin less 1.00%. Undrawn portions of the facility will be subject to customary undrawn commitment fees.

Goldman, Sachs & Co., Citigroup, Deutsche Bank Securities and Barclays acted as Joint Book-running Managers for the senior secured notes.

Citigroup, Goldman Sachs Lending Partners LLC/Goldman Sachs Bank USA, Deutsche Bank Securities and Barclays acted as Joint Lead Arrangers and Book-running Managers for the senior secured term loan and the revolving credit facility.

ABN AMRO, Credit Agricole CIB, ING, Nordea, Pareto Securities, RS Platou Markets AS, Scotiabank, SEB and Standard Chartered Bank acted as Co-Managers on the senior secured notes and as Co-Syndication and Co-Documentation Agents on the senior secured term loan.

Legal counsel for Pacific Drilling was Vinson & Elkins L.L.P., and legal counsel for the lenders was Baker Botts L.L.P.

The senior secured notes have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and unless so registered, the securities may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Pacific Drilling offered and sold the notes only to qualified institutional buyers in reliance on Rule 144A under the Securities Act and to non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, any of these securities, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

This press release includes statements regarding this private placement that may constitute forward-looking statements within the meaning of U.S. securities laws. These forward-looking statements involve certain risks and uncertainties, including, among others, Pacific Drilling's ability to draw on the senior secured revolving credit facility, which is subject to the satisfaction of certain customary financial covenants and other conditions. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management's control. Factors that can affect future results are discussed in Pacific Drilling's filings with the U.S. Securities and Exchange Commission. Pacific Drilling undertakes no obligation to update or revise any forward-looking statement to reflect new information or events.

Pacific Drilling
William Restrepo, +1 832-255-0486
Chief Financial Officer

KEYWORDS:   United States  Luxembourg  Europe  North America  Texas


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