Pacific Drilling reaches agreement with banks

Offshore drilling contractor Pacific Drilling has reached an agreement with its banking group to make certain amendments to its $500 million revolving credit facility (RCF) and $1 billion senior secured credit facility (SSCF).

According to the driller’s statement on Monday, the amendments waive the leverage ratio covenant for the fiscal quarters ending March 31, 2017 and June 30, 2017, and amend the maximum net debt per vessel test level to $400 million for these quarters.

Additionally, the amendment to the SSCF waives the loan to value covenant on the next valuation date, June 30, 2017. The amendment to the RCF also restricts the company’s ability to grant additional liens, to refinance certain existing indebtedness, and to change certain terms of existing debt during the waiver period.

In consideration, the company permanently repaid $25 million under the RCF and applied $31.7 million of cash collateral already pledged to the SSCF lenders in August 2016 against the next principal installments due under the SSCF in May 2017. Concurrently with the execution of the amendments, in accordance with its obligation to maintain the loan to rig value covenant in the SSCF at the required level as at December 31, 2016, the company made a $76 million prepayment of the SSCF.

Pacific Drilling CFO Paul Reese commented, “We are pleased to have secured these waivers and amendments, which we believe is a strong indication of our banks’ support for the company, and should provide sufficient time to reach agreement with all our stakeholders regarding an appropriate capital structure for the company.”

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