Sembcorp Marine to sell 9 jackup drilling rigs to Borr Drilling

SEMBCORP Marine's (Sembmarine) wholly-owned subsidiary, PPL Shipyard (PPLS), has agreed to sell nine Pacific Class 400 jackup drilling rigs to Borr Drilling and its subsidiaries for about US$1.3 billion, plus a market-based fee, the yard group said on Friday night.

The market fee payable is calculated based on an uplift in value of the rigs sold.

According to Sembmarine, the nine rigs sold include all six rigs from contracts which PPLS had earlier terminated with its original customers, and three rigs currently under various stages of construction completion.

Excluding all interest and the market fee payable by Borr Drilling, this transaction will result in a loss of about S$15 million, but will "significantly improve the liquidity position of the company," Sembmarine said.

"Had this transaction occurred in the financial year ended Dec 31, 2016, it would have the effect of reducing the company's 2016 earnings per share by S$0.0072, but would not have any material impact on the net tangible assets of the company for the financial year ended Dec 31, 2016," it added.

Under the terms of the agreements - subject to conditions being met by both parties - Borr Drilling will take delivery of the rigs progressively over a 14-month period, from Q4 2017 to Q1 2019.

Borr Drilling will make an upfront down payment of about US$500 million, and pay the balance of about US$800 million any time within five years from the respective delivery dates of the rigs.

It will also pay interest at market rates from the respective delivery dates of the rigs to full payment of the balance amount.

Sembmarine's counter closed 1.5 Singapore cents or 0.9 per cent higher at S$1.735 on Friday, before it announced the deal.