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¨
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|
ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Title of Each Class
|
Name of Each Exchange on which Registered
|
Common units representing limited liability company interests
|
New York Stock Exchange
|
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Large accelerated filer
x
|
Accelerated filer
o
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Non-accelerated filer
¨
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U.S. GAAP
ý
|
International Financial Reporting Standards as Issued
by the International Accounting Standards Board
¨
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Other
¨
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PART I
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|
|
Item 1.
|
||
Item 2.
|
||
Item 3.
|
||
A.
|
||
B.
|
||
C.
|
||
D.
|
||
Item 4.
|
||
A.
|
||
B.
|
||
C.
|
||
D.
|
||
Item 4A.
|
||
Item 5.
|
||
A.
|
||
B.
|
||
C.
|
||
D.
|
||
E.
|
||
F.
|
||
G.
|
||
Item 6.
|
||
A.
|
||
B.
|
||
C.
|
||
D.
|
||
E.
|
||
Item 7.
|
||
A.
|
||
B.
|
||
C.
|
||
Item 8.
|
||
A.
|
||
B.
|
||
Item 9.
|
||
A.
|
||
B.
|
||
C.
|
||
Item 10.
|
||
A.
|
||
B.
|
||
C.
|
||
D.
|
||
E.
|
||
F.
|
||
G.
|
H.
|
||
I.
|
||
Item 11.
|
||
Item 12.
|
||
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|
|
PART II
|
|
|
Item 13.
|
||
Item 14.
|
||
Item 15.
|
||
Item 16A.
|
||
Item 16B.
|
||
Item 16C.
|
||
Item 16D.
|
||
Item 16E.
|
||
Item 16F.
|
||
Item 16G.
|
||
Item 16H.
|
||
|
|
|
PART III
|
|
|
Item 17.
|
||
Item 18.
|
||
Item 19.
|
•
|
the Company's distribution policy and the Company's ability to make cash distributions on the Company's units or any increases or decreases in distributions and the amount of such increases or decreases;
|
•
|
the Company's ability to borrow under the credit facility between OPCO, as borrower, and Seadrill, as lender;
|
•
|
the Company's future financial condition or results of operations and future revenues and expenses;
|
•
|
the repayment of debt;
|
•
|
the ability of the Company, OPCO and Seadrill to comply with financing agreements and the effect of restrictive covenants in such agreements;
|
•
|
the ability of the Company's drilling units to perform satisfactorily or to the Company's expectations;
|
•
|
the financial condition of Seadrill;
|
•
|
fluctuations in the international price of oil;
|
•
|
discoveries of new sources of oil that do not require deepwater drilling units;
|
•
|
the development of alternative sources of fuel and energy;
|
•
|
technological advances, including in production, refining and energy efficiency;
|
•
|
weather events and natural disasters;
|
•
|
the Company's ability to meet any future capital expenditure requirements;
|
•
|
the Company's ability to maintain operating expenses at adequate and profitable levels;
|
•
|
expected costs of maintenance or other work performed on the Company's drilling units and any estimates of downtime;
|
•
|
the Company's ability to leverage Seadrill’s relationship and reputation in the offshore drilling industry;
|
•
|
the Company's ability to purchase drilling units in the future, including from Seadrill;
|
•
|
increasing the Company's ownership interest in OPCO;
|
•
|
delay in payments by, or disputes with the Company’s customers under its drilling contracts;
|
•
|
the financial condition of the Company’s customers and their ability and willingness to fund oil exploration, development and production activity;
|
•
|
the Company’s ability to comply with, maintain, renew or extend its existing drilling contracts;
|
•
|
the Company’s ability to re-deploy its drilling units upon termination of its existing drilling contracts at profitable dayrates;
|
•
|
the Company's ability to respond to new technological requirements in the areas in which the Company operates;
|
•
|
the occurrence of any accident involving the Company’s drilling units or other drilling units in the industry;
|
•
|
changes in governmental regulations that affect the Company and the interpretations of those regulations, particularly those that relate to environmental matters, export or import and economic sanctions or trade embargo matters, regulations applicable to the oil industry and tax and royalty legislation;
|
•
|
competition in the offshore drilling industry and other actions of competitors, including decisions to deploy or scrap drilling units in the areas in which the Company currently operates;
|
•
|
the availability on a timely basis of drilling units, supplies, personnel and oil field services in the areas in which the Company operates;
|
•
|
general economic, political and business conditions globally;
|
•
|
military operations, terrorist acts, wars or embargoes;
|
•
|
potential disruption of operations due to accidents, political events, piracy or acts by terrorists;
|
•
|
the Company's ability to obtain financing in sufficient amounts and on adequate terms;
|
•
|
workplace safety regulation and employee claims;
|
•
|
the cost and availability of adequate insurance coverage;
|
•
|
the Company's fees and expenses payable under the advisory, technical and administrative services agreements and the management and administrative services agreements;
|
•
|
the taxation of the Company and distributions to the Company's unitholders;
|
•
|
future sales of the Company's common units in the public market;
|
•
|
acquisitions and divestitures of assets and businesses by Seadrill; and
|
•
|
the Company's business strategy and other plans and objectives for future operations.
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
|
(in millions, except per unit data)
|
||||||||||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total operating revenues
|
|
$
|
1,741.6
|
|
|
$
|
1,342.6
|
|
|
$
|
1,064.3
|
|
|
$
|
911.8
|
|
|
$
|
678.9
|
|
Total operating expenses
|
|
(897.9
|
)
|
|
(727.8
|
)
|
|
(576.6
|
)
|
|
(479.7
|
)
|
|
(330.9
|
)
|
|||||
Net operating income
|
|
843.7
|
|
|
614.8
|
|
|
487.7
|
|
|
432.1
|
|
|
348.0
|
|
|||||
Total financial items
|
|
(254.7
|
)
|
|
(265.4
|
)
|
|
(39.1
|
)
|
|
(99.6
|
)
|
|
(132.3
|
)
|
|||||
Income before income taxes
|
|
589.0
|
|
|
349.4
|
|
|
448.6
|
|
|
332.5
|
|
|
215.7
|
|
|||||
Income taxes
|
|
(100.6
|
)
|
|
(34.8
|
)
|
|
(33.2
|
)
|
|
(38.9
|
)
|
|
(34.7
|
)
|
|||||
Net income
|
|
$
|
488.4
|
|
|
$
|
314.6
|
|
|
$
|
415.4
|
|
|
$
|
293.6
|
|
|
$
|
181.0
|
|
Earnings per unit (basic and diluted)
(1)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common unitholders
|
|
$
|
2.45
|
|
|
$
|
1.75
|
|
|
$
|
2.15
|
|
|
$
|
0.29
|
|
|
$
|
—
|
|
Subordinated unitholders
|
|
$
|
2.45
|
|
|
$
|
1.75
|
|
|
$
|
1.83
|
|
|
$
|
0.13
|
|
|
$
|
—
|
|
|
|
As at December 31,
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
|
(in millions, except fleet and unit data)
|
||||||||||||||||||
Balance Sheet Data (at end of period):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
319.0
|
|
|
$
|
242.7
|
|
|
$
|
89.7
|
|
|
$
|
21.2
|
|
|
$
|
15.5
|
|
Drilling units
|
|
5,547.3
|
|
|
5,141.1
|
|
|
3,448.3
|
|
|
3,241.9
|
|
|
1,837.0
|
|
|||||
Total assets
|
|
6,841.1
|
|
|
6,268.1
|
|
|
4,062.6
|
|
|
3,754.9
|
|
|
3,344.6
|
|
|||||
Total interest bearing debt
(1)
|
|
3,840.2
|
|
|
3,572.0
|
|
|
2,350.5
|
|
|
2,057.0
|
|
|
2,166.0
|
|
|||||
Total equity
|
|
2,097.4
|
|
|
2,044.3
|
|
|
1,254.6
|
|
|
1,424.4
|
|
|
1,252.5
|
|
|
|
As at December 31,
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Balance Sheet Data (at end of period):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Deferred charges - current and non-current portion
|
|
$
|
58.1
|
|
|
$
|
78.4
|
|
|
$
|
10.0
|
|
|
$
|
19.0
|
|
|
$
|
20.4
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
|
(in millions, except fleet and unit data)
|
||||||||||||||||||
Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
|
$
|
859.8
|
|
|
$
|
608.7
|
|
|
$
|
564.0
|
|
|
$
|
278.2
|
|
|
$
|
395.2
|
|
Net cash used in investing activities
|
|
(376.3
|
)
|
|
(1,542.8
|
)
|
|
(159.3
|
)
|
|
(283.5
|
)
|
|
(1,010.8
|
)
|
|||||
Net cash provided by / (used in) financing activities
|
|
(407.6
|
)
|
|
1,087.1
|
|
|
(336.2
|
)
|
|
11.0
|
|
|
625.9
|
|
|||||
Net increase in cash and cash equivalents
|
|
76.3
|
|
|
153.0
|
|
|
68.5
|
|
|
5.7
|
|
|
10.3
|
|
|||||
Fleet Data
(1)
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Number of drilling units at end of period
|
|
11
|
|
|
10
|
|
|
8
|
|
|
6
|
|
|
5
|
|
|||||
Average age of drilling units at end of period (years)
|
|
4.7
|
|
|
3.6
|
|
|
3.1
|
|
|
2.9
|
|
|
2.3
|
|
|||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
|
$
|
(18.6
|
)
|
|
$
|
(31.6
|
)
|
|
$
|
(159.3
|
)
|
|
$
|
(283.5
|
)
|
|
$
|
(594.5
|
)
|
Distributions declared per unit
|
|
1.9525
|
|
|
2.1700
|
|
|
1.6775
|
|
|
0.2906
|
|
|
—
|
|
|||||
Members Capital:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total members capital (excluding non-controlling interest)
|
|
964.3
|
|
|
928.2
|
|
|
299.0
|
|
|
524.6
|
|
|
946.2
|
|
|||||
Common Unitholders—units
|
|
75,278,250
|
|
|
75,278,250
|
|
|
44,400,563
|
|
|
24,815,000
|
|
|
—
|
|
|||||
Subordinated Unitholders—units
|
|
16,543,350
|
|
|
16,543,350
|
|
|
16,543,350
|
|
|
16,543,350
|
|
|
—
|
|
(1)
|
During the year ended December 31, 2013, the Company acquired from Seadrill two tender rigs, the
T-15
and the
T-16,
which the Company holds through a 100% limited liability company interest in Seadrill Partners Operating LLC, a 51% indirect interest in the semi-submersible drilling rig, the
West Sirius
, which the Company holds through Seadrill Capricorn Holdings LLC, and a 30% indirect interest in the semi-submersible drilling rig, the
West Leo,
which the Company holds through Seadrill Operating LP. These transactions were deemed to be a reorganization of entities under common control and therefore the fleet data has been retroactively adjusted as if the Company had acquired the interests in these units when they began operations under the ownership of Seadrill. As of January 2, 2014, the date of the Company’s first annual general meeting, Seadrill ceased to control the Company as defined by generally accepted accounting principles in the United States, or GAAP, and, therefore, Seadrill Partners and Seadrill are no longer be deemed to be entities under common control. As such, acquisitions by the Company from Seadrill subsequent to this date are no longer accounted for under this method.
|
•
|
the dayrates it obtains under its drilling contracts;
|
•
|
the level of its rig operating costs, such as the cost of crews, repair, maintenance and insurance;
|
•
|
the levels of reimbursable revenues and expenses;
|
•
|
its ability to re-contract its drilling units upon expiration or termination of an existing drilling contract and the dayrates it can obtain under such contracts;
|
•
|
delays in the delivery of any new drilling units and the beginning of payments under drilling contracts relating to those drilling units;
|
•
|
the timeliness of payments from customers under drilling contracts;
|
•
|
earn-out payment obligations related to purchases of drilling units;
|
•
|
prevailing global and regional economic and political conditions, including the current decline in the price of oil and gas;
|
•
|
time spent mobilizing drilling units to the customer location;
|
•
|
changes in local income tax rates;
|
•
|
currency exchange rate fluctuations and currency controls; and
|
•
|
the effect of governmental regulations and maritime self-regulatory organization standards on the conduct of its business.
|
•
|
the level of capital and operating expenditures it makes, including for maintaining and replacing drilling units or modifying existing drilling units to meet customer requirements and complying with regulations or to upgrade technology on the Company’s drilling units;
|
•
|
its debt service requirements, including fluctuations in interest rates, and restrictions on distributions contained in its debt instruments;
|
•
|
fluctuations in its working capital needs;
|
•
|
number of days of rig downtime or less than full utilization, which would result in a reduction of revenues under a drilling contract;
|
•
|
whether the Company or OPCO exercises any options to purchase drilling units in the future that are required to be offered to the Company or OPCO by Seadrill pursuant to the terms of the Omnibus Agreement or otherwise;
|
•
|
restrictions under laws applicable to OPCO and its subsidiaries that affect their ability to pay distributions;
|
•
|
the ability to make working capital borrowings and availability under the sponsor credit facility; and
|
•
|
the amount of any cash reserves, including reserves for future maintenance and replacement capital expenditures, working capital and other matters, established by the Company's board of directors.
|
•
|
interest expense and principal payments on any indebtedness the Company may incur;
|
•
|
restrictions on distributions contained in any of the Company's current or future debt agreements;
|
•
|
fees and expenses of the Company, the Seadrill Member, its affiliates or third parties the Company is required to reimburse or pay, including expenses the Company incurs as a result of being a public company; and
|
•
|
reserves the Company's board of directors believes are prudent for the Company to maintain for the proper conduct of its business or to provide for future distributions.
|
•
|
the cost of labor and materials;
|
•
|
customer requirements;
|
•
|
fleet size;
|
•
|
the cost of replacement drilling units;
|
•
|
the cost of replacement parts for existing drilling units;
|
•
|
the geographic location of the drilling units;
|
•
|
length of drilling contracts;
|
•
|
governmental regulations and maritime self-regulatory organization and technical standards relating to safety, security or the environment; and
|
•
|
industry standards.
|
•
|
the ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be limited or such financing may not be available on favorable terms;
|
•
|
a substantial portion of the Company's cash flow will be required to make principal (including amortization payments as required by financing agreements) and interest payments on debt, reducing the funds that would otherwise be available for operations, future business opportunities and distributions to unitholders;
|
•
|
such debt may make the Company more vulnerable to competitive pressures or a downturn in its business or the economy generally than the Company's competitors with less debt; and
|
•
|
such debt may limit the Company’s flexibility in responding to changing business and economic conditions.
|
•
|
enter into other financing agreements;
|
•
|
incur additional indebtedness;
|
•
|
create or permit liens on the Company's assets;
|
•
|
sell drilling units or the capital stock of the Company's subsidiaries;
|
•
|
change the nature of the Company's business;
|
•
|
make investments;
|
•
|
pay distributions to the Company's unitholders or to the Company, respectively;
|
•
|
change the management and/or ownership of the drilling units;
|
•
|
make capital expenditures;
|
•
|
enter into transactions with Seadrill or its affiliates; and
|
•
|
compete effectively to the extent the Company's competitors are subject to less onerous restrictions.
|
•
|
a failure to pay any principal, interest, fees, expenses or other amounts when due;
|
•
|
a violation of covenants requiring the Company to maintain certain levels of insurance coverage, minimum liquidity levels, minimum interest coverage ratios, maximum leverage ratios and minimum current ratios;
|
•
|
a default under any other provision of the financing agreements, as well as a default under any provision of related security documents;
|
•
|
a material breach of any representation or warranty contained in the applicable financing agreement;
|
•
|
a default under other indebtedness;
|
•
|
a failure to comply with a final legal judgment from a court of competent jurisdiction;
|
•
|
a bankruptcy or insolvency event;
|
•
|
a suspension or cessation of the Company's business;
|
•
|
the destruction or abandonment of the Company's assets, or the seizure or appropriation thereof by any governmental, regulatory or other authority if the lenders determine such occurrence could have a material adverse effect on the Company's business or the Company's ability to satisfy the Company's obligations under or otherwise comply with the applicable financing agreement;
|
•
|
the invalidity, unlawfulness or repudiation of any financing agreement or related security document;
|
•
|
an enforcement of any liens or other encumbrances covering the Company's assets; and
|
•
|
the occurrence of certain other events that the lenders believe is likely to have a material adverse effect on the Company's business or its ability to satisfy its obligations under or otherwise comply with the applicable financing agreement.
|
•
|
worldwide production and demand for oil and gas ;
|
•
|
the cost of exploring for, developing, producing and delivering oil and gas;
|
•
|
expectations regarding future energy prices and production;
|
•
|
advances in exploration, development and production technology;
|
•
|
the ability of the Organization of Petroleum Exporting Countries, or OPEC, to set and maintain levels and pricing;
|
•
|
the level of production in non-OPEC countries;
|
•
|
government regulations, including restrictions on offshore transportation of oil and gas;
|
•
|
local and international political, economic and weather conditions;
|
•
|
domestic and foreign tax policies;
|
•
|
development and exploitation of alternative fuels and non-conventional hydrocarbon production, including shale;
|
•
|
worldwide economic and financial conditions and the effect on the demand for oil and gas and consequently our services;
|
•
|
the policies of various governments regarding exploration and development of their oil and gas reserves;
|
•
|
accidents, severe weather, natural disasters and other similar incidents relating to the oil and gas industry; and
|
•
|
the worldwide political environment, including uncertainty or instability resulting from an escalation or additional outbreak of armed hostilities or other crises in the Middle East, Eastern Europe or other geographic areas or further acts of terrorism in the United States, Europe or elsewhere.
|
•
|
the availability of competing offshore drilling rigs;
|
•
|
the level of costs for associated offshore oilfield and construction services;
|
•
|
oil and gas transportation costs;
|
•
|
the level of rig operating costs including crew and maintenance;
|
•
|
the discovery of new oil and gas reserves; and
|
•
|
regulatory restrictions on offshore drilling.
|
•
|
renew existing drilling contracts upon their expiration;
|
•
|
obtain new drilling contracts;
|
•
|
efficiently and productively carry out the Company's drilling activities;
|
•
|
successfully interact with shipyards;
|
•
|
obtain financing and maintain insurance on commercially acceptable terms;
|
•
|
maintain access to capital under the sponsor credit facility; or
|
•
|
maintain satisfactory relationships with suppliers and other third parties.
|
•
|
breakdowns of equipment and other unforeseen engineering problems;
|
•
|
work stoppages, including labor strikes;
|
•
|
shortages of material and skilled labor;
|
•
|
delays in repairs by suppliers;
|
•
|
surveys by government and maritime authorities;
|
•
|
periodic classification surveys;
|
•
|
severe weather, strong ocean currents or harsh operating conditions; and
|
•
|
force majeure events.
|
•
|
general economic and market conditions affecting the offshore drilling industry, including competition from other offshore contract drilling companies and the price of oil and gas;
|
•
|
types, sizes and ages of drilling units;
|
•
|
supply and demand for drilling units;
|
•
|
costs of newbuildings;
|
•
|
prevailing level of drilling services contract dayrates;
|
•
|
governmental or other regulations; and
|
•
|
technological advances.
|
•
|
terrorist acts, armed hostilities, war and civil disturbances;
|
•
|
acts of piracy, which have historically affected ocean-going drilling units trading in regions of the world such as the South China Sea, the Gulf of Aden off the coast of Somalia, where piracy has increased significantly in frequency since 2008, and off the west coast of Africa;
|
•
|
significant governmental influence over many aspects of local economies;
|
•
|
seizure, nationalization or expropriation of property or equipment;
|
•
|
repudiation, nullification, modification or renegotiation of contracts;
|
•
|
limitations on insurance coverage, such as war risk coverage, in certain areas;
|
•
|
political unrest;
|
•
|
foreign and U.S. monetary policy and foreign currency fluctuations and devaluations;
|
•
|
the inability to repatriate income or capital;
|
•
|
complications associated with repairing and replacing equipment in remote locations;
|
•
|
import-export quotas, wage and price controls, imposition of trade barriers;
|
•
|
U.S. and foreign sanctions or trade embargoes;
|
•
|
regulatory or financial requirements to comply with foreign bureaucratic actions;
|
•
|
changing taxation policies, including confiscatory taxation;
|
•
|
other forms of government regulation and economic conditions that are beyond the Company's control; and
|
•
|
governmental corruption.
|
•
|
the equipping and operation of drilling units;
|
•
|
exchange rates or exchange controls;
|
•
|
oil and gas exploration and development;
|
•
|
taxation of offshore earnings and the earnings of expatriate personnel; and
|
•
|
use and compensation of local employees and suppliers by foreign contractors.
|
•
|
neither the Company's operating agreement nor any other agreement requires the Seadrill Member or Seadrill or its affiliates to pursue a business strategy that favors the Company or utilizes the Company's assets, and Seadrill’s officers and directors have a fiduciary duty to make decisions in the best interests of the shareholders of Seadrill, which may be contrary to the Company's interests;
|
•
|
the Company's operating agreement provides that the Seadrill Member may make determinations to take or decline to take actions without regard to the Company's or the Company's unitholders’ interests. Specifically, the Seadrill Member may exercise its call right, pre-emptive rights, registration rights or right to make a determination to receive common units in exchange for resetting the target distribution levels related to the incentive distribution rights, consent or withhold consent to any merger or consolidation of the company, appoint any directors or vote for the election of any director, vote or refrain from voting on amendments to the Company's operating agreement that require a vote of the outstanding units, voluntarily withdraw from the company, transfer (to the extent permitted under the Company's operating agreement) or refrain from transferring its units, the Seadrill Member interest or incentive distribution rights or vote upon the dissolution of the company;
|
•
|
the Seadrill Member and the Company's directors and officers have limited their liabilities and any fiduciary duties they may have under the laws of the Marshall Islands, while also restricting the remedies available to the Company's unitholders, and, as a result of purchasing common units, unitholders are treated as having agreed to the modified standard of fiduciary duties and to certain actions that may be taken by the Seadrill Member and the Company's directors and officers, all as set forth in the operating agreement;
|
•
|
the Seadrill Member is entitled to reimbursement of all costs incurred by it and its affiliates for the Company's benefit;
|
•
|
the Company's operating agreement does not restrict the Company from paying the Seadrill Member or its affiliates for any services rendered to the Company on terms that are fair and reasonable or entering into additional contractual arrangements with any of these entities on the Company's behalf;
|
•
|
the Seadrill Member may exercise its right to call and purchase the Company's common units if it and its affiliates own more than
80%
of the Company's common units; and
|
•
|
the Seadrill Member is not obligated to obtain a fairness opinion regarding the value of the common units to be repurchased by it upon the exercise of its limited call right.
|
•
|
the allocation of shared overhead expenses to OPCO and us;
|
•
|
the interpretation and enforcement of contractual obligations between the Company and the Company's affiliates,
|
•
|
the determination and timing of the amount of cash to be distributed to OPCO’s owners and the amount of cash to be reserved for the future conduct of OPCO’s business;
|
•
|
the decision as to whether OPCO should make asset or business acquisitions or dispositions, and on what terms;
|
•
|
the determination of the amount and timing of OPCO’s capital expenditures;
|
•
|
the determination of whether OPCO should use cash on hand, borrow or issue equity to raise cash to finance maintenance or expansion capital projects, repay indebtedness, meet working capital needs or otherwise; and
|
•
|
any decision the Company makes to engage in business activities independent of, or in competition with, OPCO.
|
•
|
provides that the Seadrill Member may make determinations or take or decline to take actions without regard to the Company's or the Company's unitholders’ interests. The Seadrill Member may consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting the Company, the Company's affiliates or the Company's unitholders. Decisions made by the Seadrill Member are made by its sole owner, Seadrill. Specifically, the Seadrill Member may decide to exercise its right to make a determination to receive common units in exchange for resetting the target distribution levels related to the incentive distribution rights, call right, pre-emptive rights or registration rights, consent or withhold consent to any merger or consolidation of the company, appoint any directors or vote for the election of any director, vote or refrain from voting on amendments to the Company's operating agreement that require a vote of the outstanding units, voluntarily withdraw from the company, transfer (to the extent permitted under the Company's operating agreement) or refrain from transferring its units, the Seadrill Member interest or incentive distribution rights or vote upon the dissolution of the company;
|
•
|
provides that the Company's directors and officers are entitled to make other decisions in “good faith,” meaning they believe that the decision is in the Company's best interests;
|
•
|
generally provides that affiliated transactions and resolutions of conflicts of interest not approved by the conflicts committee of the Company's board of directors and not involving a vote of unitholders must be on terms no less favorable to the Company than those generally being provided to or available from unrelated third parties or be “fair and reasonable” to the Company and that, in determining whether a transaction or resolution is “fair and reasonable,” the Company's board of directors may consider the totality of the relationships between the parties involved, including other transactions that may be particularly advantageous or beneficial to us; and
|
•
|
provides that neither the Seadrill Member nor the Company's officers or the Company's directors will be liable for monetary damages to the Company, the Company's members or assignees for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that the Seadrill Member, the Company's directors or officers or those other persons engaged in actual fraud or willful misconduct.
|
•
|
The unitholders are unable to remove the Seadrill Member without its consent because the Seadrill Member and its affiliates own sufficient units to be able to prevent its removal. The vote of the holders of at least 66
2
/
3
% of all outstanding common and subordinated units voting together as a single class is required to remove the Seadrill Member. As of
March 31, 2016
, Seadrill owned
46.6%
of the outstanding common and subordinated units.
|
•
|
If the Seadrill Member is removed without “cause” during the subordination period and units held by the Seadrill Member and Seadrill are not voted in favor of that removal, all remaining subordinated units will automatically convert into common units, any existing arrearages on the common units will be extinguished, and the Seadrill Member will have the right to convert its incentive distribution rights into common units or to receive cash in exchange for those interests based on the fair market value of those interests at the time. A removal of the Seadrill Member under these circumstances would adversely affect the common units by prematurely eliminating their distribution and liquidation preference over the subordinated units, which would otherwise have continued until the Company has met certain distribution and performance tests. Any conversion of the Seadrill Member interest or incentive distribution rights would be dilutive to existing unitholders. Furthermore, any cash payment in lieu of such conversion could be prohibitively expensive. “Cause” is narrowly defined to mean that with respect to a director or officer, a court of competent jurisdiction has entered a final, non-appealable judgment finding such director or officer liable for actual fraud or willful misconduct, and with respect to the Seadrill Member, the Seadrill Member is in breach of the operating agreement or a court of competent jurisdiction has entered a final, non-appealable judgment finding the Seadrill Member liable for actual fraud or willful misconduct against the Company or its members, in their capacity as such. Cause does not include most cases of charges of poor business decisions, such as charges of poor management of the Company's business by the directors appointed by the Seadrill Member, so the removal of the Seadrill Member because of the unitholders’ dissatisfaction with the Seadrill Member’s decisions in this regard would most likely result in the termination of the subordination period.
|
•
|
Common unitholders are entitled to elect only four of the seven members of the Company's board of directors. The Seadrill Member in its sole discretion appoints the remaining three directors.
|
•
|
Election of the four directors elected by unitholders is staggered, meaning that the members of only one of three classes of the Company's elected directors are selected each year. In addition, the directors appointed by the Seadrill Member serve for terms determined by the Seadrill Member.
|
•
|
The Company's operating agreement contains provisions limiting the ability of unitholders to call meetings of unitholders, to nominate directors and to acquire information about the Company's operations as well as other provisions limiting the unitholders’ ability to influence the manner or direction of management.
|
•
|
Unitholders’ voting rights are further restricted by the operating agreement provision providing that if any person or group owns beneficially more than
5%
of any class of units then outstanding, any such units owned by that person or group in excess of
5%
may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes (except for purposes of nominating a person for election to the Company's board), determining the
|
•
|
There are no restrictions in the Company's operating agreement on the Company's ability to issue additional equity securities.
|
•
|
the Company's unitholders’ proportionate ownership interest in the Company will decrease;
|
•
|
the amount of cash available for distribution on each unit may decrease;
|
•
|
because a lower percentage of total outstanding units will be subordinated units, the risk that a shortfall in the payment of the minimum quarterly distribution will be borne by the Company's common unitholders will increase;
|
•
|
the relative voting strength of each previously outstanding unit may be diminished; and
|
•
|
the market price of the common units may decline.
|
•
|
the semi-submersible
West Aquarius
, which was delivered from the shipyard in 2009 and is currently operating under a drilling contract with ExxonMobil that expires in April 2017;
|
•
|
the semi-submersible
West Capricorn
, which was delivered from the shipyard in 2011 and is currently operating under a drilling contract with BP that expires in July 2019;
|
•
|
the semi-submersible
West Leo
, which was delivered from the shipyard in 2012 and is currently operating under a drilling contract with Tullow that expires in July 2018;
|
•
|
the semi-submersible
West Sirius
, which was delivered from the shipyard in 2008 and operated under a drilling contract with BP, which was terminated early in April 2015. The
West Sirius
is currently earning early termination fees until July 2017;
|
•
|
the semi-tender rig
West Vencedor
, which was delivered from the shipyard in 2010 and is currently operating under a drilling contract with Petronas that expires in July 2016;
|
•
|
the tender rig
T-15
, which was delivered from the shipyard in 2013 and is currently operating under a 5-year drilling contract with Chevron that expires in July 2019;
|
•
|
the tender rig
T-16
, which was delivered from the shipyard in 2013 and is currently operating under a 5-year drilling contract with Chevron that expires in August 2019;
|
•
|
the drillship
West Auriga
, which was delivered from the shipyard in 2013 and is currently operating under a drilling contract with BP that expires in October 2020;
|
•
|
the drillship
West Vela
, which was delivered from the shipyard in 2013 and is currently operating under a drilling contract with BP that expires in November 2020;
|
•
|
the drillship
West Capella
, which was delivered from the shipyard in 2008 and is currently operating under a drilling contract with ExxonMobil that expires in April 2017; and
|
•
|
the drillship
West Polaris
, which was delivered from the shipyard in 2008 and is currently operating under a drilling contract with ExxonMobil that expires in March 2018.
|
•
|
Grow Through Strategic and Accretive Acquisitions
.
The Company intends to capitalize on opportunities to grow the Company's fleet of drilling units through acquisitions of offshore drilling units from Seadrill, either by the Company or by OPCO, and acquisitions of offshore drilling units from third parties.
|
•
|
Pursue Long-term Contracts and Maintain Stable Cash Flow
.
The Company seeks to maintain stable cash flows by continuing to pursue long-term contracts. The Company's focus on long-term contracts improves the stability and predictability of the
|
•
|
Provide Excellent Customer Service and Continue to Prioritize Safety as a Key Element of The Company's Operations
.
The Company believes that Seadrill has developed a reputation as a preferred offshore drilling contractor and that the Company can capitalize on this reputation by continuing to provide excellent customer service. The Company seeks to deliver exceptional performance to the Company's customers by consistently meeting or exceeding their expectations for operational performance, including by maintaining high safety standards and minimizing downtime.
|
•
|
Maintain a Modern and Reliable Fleet
.
The Company has one of the youngest and most technologically advanced fleets in the industry, and plans to maintain a modern and reliable fleet.
|
Rig Name
|
Seadrill Partners Ownership Interest
|
|
Year Built
|
|
Water
Depth
(feet)
|
|
Drilling
Depth
(feet)
|
|
Location
|
|
Customer
|
||
Semi-submersible
|
|
|
|
|
|
|
|
|
|
|
|
||
West Aquarius
|
58%
|
|
2009
|
|
10,000
|
|
|
35,000
|
|
|
Canada
|
|
ExxonMobil/Hibernia Management (1)
|
West Capricorn
|
51%
|
|
2011
|
|
10,000
|
|
|
35,000
|
|
|
USA (Gulf of Mexico)
|
|
BP
|
West Leo
|
58%
|
|
2012
|
|
10,000
|
|
|
35,000
|
|
|
Ghana
|
|
Tullow
|
West Sirius
|
51%
|
|
2008
|
|
10,000
|
|
|
35,000
|
|
|
USA (Gulf of Mexico)
|
|
BP
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Drillship
|
|
|
|
|
|
|
|
|
|
|
|
||
West Capella
(2)
|
33%
|
|
2008
|
|
10,000
|
|
|
35,000
|
|
|
Nigeria
|
|
ExxonMobil
|
West Polaris
|
58%
|
|
2008
|
|
10,000
|
|
|
35,000
|
|
|
Angola
|
|
ExxonMobil
|
West Auriga
|
51%
|
|
2013
|
|
12,000
|
|
|
40,000
|
|
|
USA (Gulf of Mexico)
|
|
BP
|
West Vela
|
51%
|
|
2013
|
|
12,000
|
|
|
40,000
|
|
|
USA (Gulf of Mexico)
|
|
BP
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Tender Rig
|
|
|
|
|
|
|
|
|
|
|
|
||
West Vencedor
|
58%
|
|
2010
|
|
6,500
|
|
|
30,000
|
|
|
Myanmar
|
|
Petronas
|
T-15
|
100%
|
|
2013
|
|
6,500
|
|
|
30,000
|
|
|
Thailand
|
|
Chevron
|
T-16
|
100%
|
|
2013
|
|
6,500
|
|
|
30,000
|
|
|
Thailand
|
|
Chevron
|
(1)
|
For each country where the
West Aquarius
operates under its drilling contract, a specific local contract and corresponding dayrate is agreed between the local ExxonMobil operating company and the local Seadrill subsidiary. In addition, the drilling contract permits ExxonMobil to assign the contract to third parties in certain circumstances. The
West Aquarius
drilling contract was assigned to Hibernia Management and Development Co. Ltd as of March 31, 2016.
|
(2)
|
The Company owns 58% of Seadrill Operating LP, which controls and owns 56% of the entity that owns the
West Capella
. Pursuant to Nigerian law, a Nigerian partner owns an effective 1% interest in the
West Capella
. Seadrill owns the remaining ownership interest in the entity that owns the
West Capella
.
|
|
|
|
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
Customer
|
Country
|
Rig Name
|
|
($ in millions)
|
|
%
|
|
($ in millions)
|
|
%
|
|
($ in millions)
|
|
%
|
|||||||||
ExxonMobil
|
Nigeria
|
West Capella
|
|
$
|
236.7
|
|
|
14.3
|
%
|
|
$
|
228.5
|
|
|
17.0
|
%
|
|
$
|
207.5
|
|
|
19.6
|
%
|
ExxonMobil (1)
|
Canada
|
West Aquarius
|
|
190.9
|
|
|
11.5
|
%
|
|
126.1
|
|
|
9.4
|
%
|
|
153.5
|
|
|
14.5
|
%
|
|||
ExxonMobil
|
Angola
|
West Polaris
|
|
131.6
|
|
|
8.0
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
BP
|
USA
|
West Capricorn
|
|
209.7
|
|
|
12.7
|
%
|
|
176.3
|
|
|
13.1
|
%
|
|
183.5
|
|
|
17.3
|
%
|
|||
Chevron
|
Angola
|
West Vencedor
|
|
47.8
|
|
|
2.9
|
%
|
|
92.4
|
|
|
6.9
|
%
|
|
87.9
|
|
|
8.3
|
%
|
|||
Petronas
|
Myanmar
|
West Vencedor
|
|
5.6
|
|
|
0.3
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
BP
|
USA
|
West Sirius
|
|
57.2
|
|
|
3.5
|
%
|
|
179.8
|
|
|
13.4
|
%
|
|
186.9
|
|
|
17.7
|
%
|
|||
Tullow
|
Ghana
|
West Leo
|
|
234.7
|
|
|
14.2
|
%
|
|
233.5
|
|
|
17.4
|
%
|
|
198.6
|
|
|
18.8
|
%
|
|||
Chevron
|
Thailand
|
T-15
|
|
49.4
|
|
|
3.0
|
%
|
|
54.4
|
|
|
4.1
|
%
|
|
24.5
|
|
|
2.3
|
%
|
|||
Chevron
|
Thailand
|
T-16
|
|
50.4
|
|
|
3.0
|
%
|
|
51.2
|
|
|
3.8
|
%
|
|
16.1
|
|
|
1.5
|
%
|
|||
BP
|
USA
|
West Auriga
|
|
219.8
|
|
|
13.3
|
%
|
|
167.5
|
|
|
12.5
|
%
|
|
—
|
|
|
—
|
%
|
|||
BP
|
USA
|
West Vela
|
|
219.7
|
|
|
13.3
|
%
|
|
32.9
|
|
|
2.5
|
%
|
|
—
|
|
|
—
|
%
|
|||
Total
|
|
|
|
$
|
1,653.5
|
|
|
100
|
%
|
|
$
|
1,342.6
|
|
|
100
|
%
|
|
$
|
1,058.5
|
|
|
100
|
%
|
(1)
|
For each country where the
West Aquarius
operates under its drilling contract, a specific local contract and corresponding dayrate is agreed between the local ExxonMobil operating company and the local Seadrill subsidiary. In addition, the drilling contract permits ExxonMobil to assign the contract to third parties in certain circumstances. The ExxonMobil drilling contract for the
West Aquarius
was assigned to Hibernia Management and Development Co. Ltd during 2015, 2014 and part of 2013 and to Statoil Canada Ltd. during part of 2013.
|
Rig
|
Contracted
Location |
|
Customer
|
|
Contract
Backlog(1) (US $ millions) |
|
Contractual
Dayrate (US $) |
|
Contract Commencement |
|
Contract
Termination Date |
||||
West Aquarius
|
Canada
|
|
ExxonMobil/Hibernia Management
|
|
$
|
237
|
|
|
$
|
615,000
|
|
(2)
|
Oct 2015
|
|
Apr 2017
|
West Capricorn
|
USA
|
|
BP
|
|
$
|
635
|
|
|
$
|
526,000
|
|
(3)
|
Apr 2015
|
|
Jul 2019
|
West Leo
|
Ghana
|
|
Tullow
|
|
$
|
497
|
|
|
$
|
605,000
|
|
(4)
|
Jun 2013
|
|
Jul 2018
|
West Sirius
|
USA
|
|
BP
|
|
$
|
143
|
|
|
$
|
297,000
|
|
(5)
|
May 2015
|
|
Jul 2017
|
West Capella
|
Nigeria
|
|
ExxonMobil
|
|
$
|
232
|
|
|
$
|
627,500
|
|
|
Apr 2014
|
|
Apr 2017
|
West Polaris
|
Angola
|
|
ExxonMobil
|
|
$
|
315
|
|
|
$
|
450,000
|
|
(6)
|
Mar 2013
|
|
Mar 2018
|
West Auriga
|
USA
|
|
BP
|
|
$
|
924
|
|
|
$
|
562,000
|
|
(7)
|
Oct 2013
|
|
Oct 2020
|
West Vela
|
USA
|
|
BP
|
|
$
|
886
|
|
|
$
|
525,000
|
|
(8)
|
Nov 2013
|
|
Nov 2020
|
West Vencedor
|
Myanmar
|
|
Petronas
|
|
$
|
10
|
|
|
$
|
100,000
|
|
|
Dec 2015
|
|
Jul 2016
|
T-15
|
Thailand
|
|
Chevron
|
|
$
|
131
|
|
|
$
|
110,000
|
|
|
Jul 2013
|
|
Jul 2019
|
T-16
|
Thailand
|
|
Chevron
|
|
$
|
134
|
|
|
$
|
110,000
|
|
|
Aug 2013
|
|
Aug 2019
|
(1)
|
Expressed in millions. Based on executed drilling contracts.
|
(2)
|
Dayrate includes a mobilization fee of
$30 million
that is being amortized over the contract period. The
West Aquarius
drilling contract was assigned to Hibernia Management and Development Co. Ltd.
|
(3)
|
BP has an option to extend the expiration date of the contract for up to two years from July 2019.
|
(4)
|
The base dayrate is
$590,000
for operations in Ghana and will be adjusted for operations in Côte d’Ivoire and Guinea. The dayrate shown above for Ghana includes a performance bonus based on achievement of
95%
utilization. A mobilization fee of
$18 million
is being amortized into income over the period of the term of this contract.
|
(5)
|
The signed drilling contract was terminated early by BP and ended in April 2015. The backlog of
$143 million
consists of
$297,000
per day from April 2016 until July 2017, to be received by the Company in accordance with the termination provisions in the
West Sirius
contract. The average remaining contract term of
2.4
years as of
March 31, 2016
for the fleet does not include this period for the
West Sirius
.
|
(6)
|
Under the terms of the acquisition agreement for the
West Polaris
, Seadrill Polaris has agreed to pay Seadrill (a) any dayrate received in excess of $450,000 per day, adjusted for daily utilization, through the remaining term, without extension, of the ExxonMobil contract and (b) after the expiration of the term of the existing contract until March 2025, 50% of any such excess dayrate, adjusted for daily utilization.
|
(8)
|
A mobilization fee payable daily over the term of the contract of
$37.5 million
is being amortized into income over the period of the term of this contract. This amount is payable to Seadrill for the remainder of the contract under the terms of the West Vela acquisition agreement.
|
•
|
The Company does not own all of the interests in OPCO
.
As a result, the Company's cash flow does not include distributions on Seadrill’s interest in OPCO. The Company owns (i) a
58%
limited partner interest in Seadrill Operating LP, as well as the non-economic general partner interest in Seadrill Operating LP through its
100%
ownership of its general partner, Seadrill Operating GP LLC, and (ii) a
51%
limited liability company interest in Seadrill Capricorn Holdings LLC. The Company controls Seadrill Operating LP through its ownership of Seadrill Operating LP's general partner and Seadrill Capricorn Holdings LLC through its ownership of the majority of its limited liability company interests. Seadrill owns the remaining
42%
limited partner interest in Seadrill Operating LP and the remaining
49%
limited liability company interest in Seadrill Capricorn Holdings LLC. In July 2014 the Company acquired an additional 28% limited partner interest in Seadrill Operating LP from Seadrill bringing its total ownership interest in Seadrill Operating LP from 30% to 58%. The operating agreements of OPCO require it to distribute all of its available cash each quarter. In determining the amount of cash available for distribution by the Company to its unitholders, the Company's board of directors must approve the amount of cash reserves to be set aside, including reserves for future maintenance and replacement capital expenditures, working capital and other matters. Distributions by OPCO to Seadrill in respect of its ownership interest in OPCO are not available for distribution to unitholders of the Company.
|
•
|
Business combinations between entities under common control.
Reorganization of entities under common control is accounted for as if the transfer occurred from the date that both the combining entity and combined entity were both under the common control of Seadrill. Therefore, the Company’s financial statements prior to the date the interests in the combining entity were actually acquired are retroactively adjusted to include the results of the combined entities during the period it was under common control of Seadrill. The acquisitions of the entities that own and operate the
T-15, T-16
,
West Leo
and
West Sirius
in 2013 from Seadrill were accounted for under this method. As of January 2, 2014, the date of the Company's first annual general meeting, Seadrill ceased to control the Company as
|
•
|
The size of the Company’s fleet continues to change.
The Company's financial statements reflect changes in the size and composition of the Company’s fleet due to certain rig deliveries and contract commencement dates. For instance, the
West Capricorn
was delivered from the shipyard at the end of 2011, and the contract commencement date occurred in July 2012. Furthermore, during 2013 the Company acquired the
T-15, T-16, West Leo
and
West Sirius
, and during 2014 the Company acquired the
West Auriga
and
West Vela,
and during 2015 the Company acquired the
West Polaris
. The Company expects the Company’s fleet will continue to change over time. Furthermore, the Company may grow in the future through the acquisition of additional drilling units as part of the Company's growth strategy.
|
•
|
The Company may enter into different financing agreements
. The financing agreements, including the interest expense relating thereto, currently in place may not be representative of the agreements that will be in place in the future. For example, the Company may amend its existing credit facilities or enter into new financing agreements and such new agreements may not be on the same terms as Seadrill’s financing agreements. In connection with the closing of the Company's IPO, the Company entered into a
$300 million
revolving credit facility with Seadrill as the lender, which the Company refers to as the "sponsor credit facility". In 2014 the sponsor credit facility was reduced to
$100 million
. In addition, in February 2014, the Company entered into the Senior Secured Credit Facilities and refinanced its debt secured by the
West Aquarius, West Capella, West Leo
and
West Sirius,
and in June 2014 entered into the Amended Senior Secured Credit Facilities and refinanced its debt secured by the
West Capricorn
and the
West Auriga
and in November 2014, refinanced its debt secured by the
West
Vela
. For descriptions of the Company's current financing agreements, please read "Liquidity and Capital Resources—Borrowing Activities.”
|
•
|
the Company’s ability to successfully employ its drilling units at economically attractive dayrates as contracts expire or are otherwise terminated;
|
•
|
the ability to maintain good relationships with the Company’s existing customers and to increase the number of customer relationships;
|
•
|
the number and availability of the Company's drilling units, including the Company's ability to exercise any options to purchase additional drilling units that may arise under the omnibus agreement or otherwise;
|
•
|
changes in the Company's ownership of OPCO;
|
•
|
fluctuations and current decline in the price of oil and gas, which influence the demand for offshore drilling services;
|
•
|
the effective and efficient technical management of drilling units;
|
•
|
The Company’s ability to obtain and maintain major oil and gas company approvals and to satisfy their quality, technical, health, safety and compliance standards;
|
•
|
economic, regulatory, political and governmental conditions that affect the offshore drilling industry;
|
•
|
accidents, natural disasters, adverse weather, equipment failure or other events outside of its control that may result in downtime;
|
•
|
the financial condition of Seadrill
|
•
|
The ability of the Company/OPCO and Seadrill to comply with financing agreements and the effect of the restrictive covenants in such agreements
|
•
|
mark-to-market changes in interest rate swaps;
|
•
|
foreign currency exchange gains and losses;
|
•
|
the Company's access to capital required to acquire additional drilling units or equity interests in OPCO and/or to implement its business strategy;
|
•
|
increases in crewing and insurance costs and other operating costs;
|
•
|
the level of debt and the related interest expense and amortization of principal; and
|
•
|
the level of any distribution on the Company's common units.
|
(In $ millions)
|
Fair Value of Drilling Unit
|
Favorable Contract
|
Deferred Contingent Consideration
|
Gain on Bargain Purchase
|
||||
Long term dayrate +5%
|
57.7
|
|
—
|
|
9.2
|
|
48.5
|
|
Long term dayrate -5%
|
(57.7
|
)
|
—
|
|
(31.2
|
)
|
(26.5
|
)
|
Discount factor + 0.5%
|
(22.4
|
)
|
(0.3
|
)
|
(2.3
|
)
|
(20.2
|
)
|
Discount factor - 0.5%
|
23.9
|
|
0.3
|
|
2.3
|
|
21.6
|
|
|
Year Ended December 31,
|
|
Increase/Decrease
|
|||||||||||
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
(US$ in millions)
|
|
|
|
|
|
|||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|||||||
Contract revenues
|
$
|
1,603.6
|
|
|
$
|
1,302.7
|
|
|
$
|
300.9
|
|
|
23.1
|
%
|
Reimbursable revenues
|
49.9
|
|
|
39.9
|
|
|
10.0
|
|
|
25.1
|
%
|
|||
Other revenues
|
88.1
|
|
|
—
|
|
|
88.1
|
|
|
100.0
|
%
|
|||
Total operating revenues
|
1,741.6
|
|
|
1,342.6
|
|
|
399.0
|
|
|
29.7
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Vessel and rig operating expenses
|
495.5
|
|
|
425.0
|
|
|
70.5
|
|
|
16.6
|
%
|
|||
Amortization of favorable contracts
|
66.9
|
|
|
14.8
|
|
|
52.1
|
|
|
352.0
|
%
|
|||
Reimbursable expenses
|
45.7
|
|
|
37.9
|
|
|
7.8
|
|
|
20.6
|
%
|
|||
Depreciation and amortization
|
237.5
|
|
|
198.7
|
|
|
38.8
|
|
|
19.5
|
%
|
|||
General and administrative expenses
|
52.3
|
|
|
51.4
|
|
|
0.9
|
|
|
1.8
|
%
|
|||
Total operating expenses
|
897.9
|
|
|
727.8
|
|
|
170.1
|
|
|
23.4
|
%
|
|||
Net operating income
|
$
|
843.7
|
|
|
$
|
614.8
|
|
|
$
|
228.9
|
|
|
37.2
|
%
|
|
|
|
|
|
|
|
|
|||||||
Financial items:
|
|
|
|
|
|
|
|
|||||||
Interest income
|
9.8
|
|
|
3.7
|
|
|
6.1
|
|
|
164.9
|
%
|
|||
Interest expense
|
(192.5
|
)
|
|
(140.9
|
)
|
|
(51.6
|
)
|
|
36.6
|
%
|
|||
(Loss) / gain on derivative financial instruments
|
(82.9
|
)
|
|
(124.9
|
)
|
|
42.0
|
|
|
(33.6
|
)%
|
|||
Currency exchange gain / (loss)
|
1.6
|
|
|
(3.3
|
)
|
|
4.9
|
|
|
(148
|
)%
|
|||
Gain on bargain purchase
|
9.3
|
|
|
—
|
|
|
9.3
|
|
|
100.0
|
%
|
|||
Total financial items
|
(254.7
|
)
|
|
(265.4
|
)
|
|
10.7
|
|
|
(4.0
|
)%
|
|||
Income before income taxes
|
589.0
|
|
|
349.4
|
|
|
239.6
|
|
|
68.6
|
%
|
|||
Income taxes
|
(100.6
|
)
|
|
(34.8
|
)
|
|
(65.8
|
)
|
|
189.1
|
%
|
|||
Net Income
|
$
|
488.4
|
|
|
$
|
314.6
|
|
|
$
|
173.8
|
|
|
55.2
|
%
|
Net income attributable to the non-controlling interest
|
$
|
(231.2
|
)
|
|
$
|
(176.4
|
)
|
|
$
|
(54.8
|
)
|
|
31.1
|
%
|
Net income attributable to Seadrill Partners LLC
|
$
|
257.2
|
|
|
$
|
138.2
|
|
|
$
|
119.0
|
|
|
86.1
|
%
|
|
Year Ended December 31,
|
||||||||||||
|
2015
|
|
2014
|
||||||||||
|
Average
Daily Revenues (1) |
|
Economic
Utilization
(2)
|
|
Average
Daily Revenues (1) |
|
Economic
Utilization
(2)
|
||||||
Semi-submersible rigs
(3)
|
$
|
551,590
|
|
|
93.0
|
%
|
|
$
|
444,149
|
|
|
83.2
|
%
|
Drillship
|
$
|
608,444
|
|
|
98.7
|
%
|
|
$
|
578,856
|
|
|
98.3
|
%
|
Tender rigs
|
$
|
148,634
|
|
|
98.5
|
%
|
|
$
|
154,611
|
|
|
98.0
|
%
|
(1)
|
Average daily revenues are the average revenues for each type of unit, based on the actual days available for each unit of that type, while on contract.
|
(2)
|
Economic utilization is calculated as the total revenue, excluding bonuses, received divided by the full operating dayrate multiplied by the number of days in the period.
|
(3)
|
Average daily revenue excludes the termination payments received as part of the termination of the drilling contract by BP for the
West Sirius.
|
|
Year Ended December 31,
|
||||||
(US$ millions)
|
2015
|
|
2014
|
||||
Interest income
|
$
|
9.8
|
|
|
$
|
3.7
|
|
Currency exchange gain (loss)
|
1.6
|
|
|
(3.3
|
)
|
||
Total other financial items
|
$
|
11.4
|
|
|
$
|
0.4
|
|
($US in millions)
|
Year Ended December 31,
|
|
Increase/Decrease
|
|||||||||||
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Operating revenues:
|
|
|
|
|
|
|
|
|||||||
Contract revenues
|
$
|
1,302.7
|
|
|
$
|
1,047.1
|
|
|
$
|
255.6
|
|
|
24.4
|
%
|
Reimbursable revenues
|
39.9
|
|
|
11.4
|
|
|
28.5
|
|
|
250.0
|
%
|
|||
Other revenues
|
—
|
|
|
5.8
|
|
|
(5.8
|
)
|
|
(100.0
|
)%
|
|||
Total operating revenues
|
1,342.6
|
|
|
1,064.3
|
|
|
278.3
|
|
|
26.1
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Vessel and rig operating expenses
|
425.0
|
|
|
375.2
|
|
|
49.8
|
|
|
13.3
|
%
|
|||
Amortization of favorable contracts
|
14.8
|
|
|
—
|
|
|
14.8
|
|
|
100.0
|
%
|
|||
Reimbursable expenses
|
37.9
|
|
|
10.6
|
|
|
27.3
|
|
|
257.5
|
%
|
|||
Depreciation and amortization
|
198.7
|
|
|
141.2
|
|
|
57.5
|
|
|
40.7
|
%
|
|||
General and administrative expenses
|
51.4
|
|
|
49.6
|
|
|
1.8
|
|
|
3.6
|
%
|
|||
Total operating expenses
|
727.8
|
|
|
576.6
|
|
|
151.2
|
|
|
26.2
|
%
|
|||
Net operating income
|
$
|
614.8
|
|
|
$
|
487.7
|
|
|
$
|
127.1
|
|
|
26.1
|
%
|
|
|
|
|
|
|
|
|
|||||||
Financial items:
|
|
|
|
|
|
|
|
|||||||
Interest income
|
3.7
|
|
|
4.4
|
|
|
(0.7
|
)
|
|
(15.9
|
)%
|
|||
Interest expense
|
(140.9
|
)
|
|
(92.2
|
)
|
|
(48.7
|
)
|
|
52.8
|
%
|
|||
Loss / (Gain) on derivative financial instruments
|
(124.9
|
)
|
|
49.9
|
|
|
(174.8
|
)
|
|
(350.3
|
)%
|
|||
Currency exchange loss
|
(3.3
|
)
|
|
(1.2
|
)
|
|
(2.1
|
)
|
|
175.0
|
%
|
|||
Total financial items
|
(265.4
|
)
|
|
(39.1
|
)
|
|
(226.3
|
)
|
|
578.8
|
%
|
|||
Income before income taxes
|
349.4
|
|
|
448.6
|
|
|
(99.2
|
)
|
|
(22.1
|
)%
|
|||
Income taxes
|
(34.8
|
)
|
|
(33.2
|
)
|
|
(1.6
|
)
|
|
4.8
|
%
|
|||
Net Income
|
$
|
314.6
|
|
|
$
|
415.4
|
|
|
$
|
(100.8
|
)
|
|
(24.3
|
)%
|
Net income attributable to the non-controlling interest
|
$
|
(176.4
|
)
|
|
$
|
(271.0
|
)
|
|
$
|
94.6
|
|
|
(34.9
|
)%
|
Net income attributable to Seadrill Partners LLC
|
$
|
138.2
|
|
|
$
|
144.4
|
|
|
$
|
(6.2
|
)
|
|
(4.3
|
)%
|
|
Year Ended December 31,
|
||||||||||||
|
2014
|
|
2013
|
||||||||||
|
Average Daily
Revenues
|
|
Economic
Utilization
|
|
Average Daily
Revenues
|
|
Economic
Utilization
|
||||||
Semi-submersible rigs
|
$
|
444,149
|
|
|
83.2
|
%
|
|
$
|
464,300
|
|
|
90.4
|
%
|
Drillship
|
$
|
578,856
|
|
|
98.3
|
%
|
|
$
|
541,800
|
|
|
96.9
|
%
|
Tender rigs
|
$
|
154,611
|
|
|
98.0
|
%
|
|
$
|
154,967
|
|
|
100.0
|
%
|
(1)
|
Average daily revenues are the average revenues for each type of unit, based on the actual days available for each unit of that type, while on contract.
|
(2)
|
Economic utilization is calculated as the total revenue, excluding bonuses, received divided by the full operating dayrate multiplied by the number of days in the period.
|
|
Year Ended December 31,
|
||||
(US$ millions)
|
2014
|
|
2013
|
||
Interest income
|
3.7
|
|
|
4.4
|
|
Currency exchange loss
|
(3.3
|
)
|
|
(1.2
|
)
|
Total other financial items
|
0.4
|
|
|
3.2
|
|
•
|
Analysis of cash flows for the years ending
December 31, 2015
,
2014
and
2013
|
•
|
Estimated maintenance and replacement capital expenditures
|
•
|
Borrowing activities
|
•
|
Restrictive covenants
|
•
|
Liquidity requirements
|
•
|
Derivative instruments and hedging activities
|
($ in millions)
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net cash provided by operating activities
|
$
|
859.8
|
|
|
$
|
608.7
|
|
|
$
|
564.0
|
|
Net cash used in investing activities
|
(376.3
|
)
|
|
(1,542.8
|
)
|
|
(159.3
|
)
|
|||
Net cash (used in) / provided by financing activities
|
(407.6
|
)
|
|
1,087.1
|
|
|
(336.2
|
)
|
|||
Effect of exchange rate changes on cash
|
0.4
|
|
|
—
|
|
|
—
|
|
|||
Net increase in cash and cash equivalents
|
76.3
|
|
|
153.0
|
|
|
68.5
|
|
|||
Cash and cash equivalents at beginning of period
|
242.7
|
|
|
89.7
|
|
|
21.2
|
|
|||
Cash and cash equivalents at end of period
|
319.0
|
|
|
242.7
|
|
|
89.7
|
|
(In US$ millions)
|
December 31, 2015
|
|
|
December 31, 2014
|
|
External debt agreements
|
|
|
|
||
Amended Senior Secured Credit Facilities
|
2,894.7
|
|
|
2,881.0
|
|
$1,450 Senior Secured Credit Facility
|
382.6
|
|
|
422.9
|
|
$420 West Polaris Facility
|
315.0
|
|
|
—
|
|
Sub-total external debt
|
3,592.3
|
|
|
3,303.9
|
|
Less current portion long term external debt
|
(105.3
|
)
|
|
(76.5
|
)
|
Long-term external debt
|
3,487.0
|
|
|
3,227.4
|
|
|
|
|
|
||
Related party debt agreements
|
|
|
|
||
Rig Financing and Loan Agreements
|
|
|
|
||
West Vencedor
Loan Agreement (previously $1,200 facility)
|
57.5
|
|
|
78.2
|
|
$440 Rig Financing Agreement
|
139.0
|
|
|
158.8
|
|
Sub-total Rig Financing Agreements
|
196.5
|
|
|
237.0
|
|
|
|
|
|
||
Other related party debt
|
|
|
|
||
$109.5 T-15 vendor financing facility
|
109.5
|
|
|
109.5
|
|
Total related party debt
|
306.0
|
|
|
346.5
|
|
Less current portion of related party debt
|
(145.8
|
)
|
|
(40.4
|
)
|
Long-term related party debt and related party loan notes
|
160.2
|
|
|
306.1
|
|
|
|
|
|
||
Total external and related party debt
|
3,898.3
|
|
|
3,650.4
|
|
|
|
Outstanding debt as of December 31, 2015
|
||||||||
(In $ millions)
|
|
Principal outstanding
|
|
Debt Issuance Costs
|
|
Total Debt
|
|
|||
Current portion of long-term external debt
|
|
$
|
105.3
|
|
$
|
(11.5
|
)
|
$
|
93.8
|
|
Long-term external debt
|
|
3,487.0
|
|
(46.6
|
)
|
3,440.4
|
|
|||
Total external debt
|
|
$
|
3,592.3
|
|
$
|
(58.1
|
)
|
$
|
3,534.2
|
|
|
|
Outstanding debt as of December 31, 2014
|
||||||||
(In $ millions)
|
|
Principal outstanding
|
|
Debt Issuance Costs
|
|
Total Debt
|
|
|||
Current portion of long-term external debt
|
|
$
|
76.5
|
|
$
|
(7.6
|
)
|
$
|
68.9
|
|
Long-term external debt
|
|
3,227.4
|
|
(70.8
|
)
|
3,156.6
|
|
|||
Total external debt
|
|
$
|
3,303.9
|
|
$
|
(78.4
|
)
|
$
|
3,225.5
|
|
|
Payments Due by Period
|
||||||||||||||||||
($ in millions)
|
Total
|
|
Less than
1 Year
|
|
1-3 Years
|
|
4-5 Years
|
|
More than
5 Years
|
||||||||||
Long-term debt obligations
|
$
|
3,898.3
|
|
|
$
|
251.1
|
|
|
$
|
839.6
|
|
|
$
|
58.0
|
|
|
$
|
2,749.6
|
|
Interest expense commitments on long-term debt obligations
(1)
|
585.7
|
|
|
120.3
|
|
|
217.2
|
|
|
200.6
|
|
|
47.6
|
|
|||||
Commitment fee on undrawn facility
(2)
|
16.1
|
|
|
2.3
|
|
|
4.6
|
|
|
4.6
|
|
|
4.6
|
|
|||||
Deferred consideration payable
(3)
|
290.5
|
|
|
35.8
|
|
|
74.3
|
|
|
73.4
|
|
|
107.0
|
|
|||||
Total
|
$
|
4,790.6
|
|
|
$
|
409.5
|
|
|
$
|
1,135.7
|
|
|
$
|
336.6
|
|
|
$
|
2,908.8
|
|
(1)
|
The Company's interest commitment on long-term debt is calculated based on the applicable interest rates contained in its loan agreements as of December 31, 2015 and the associated interest rate swap rates.
|
(2)
|
The $100 million revolving credit facility with Seadrill and the $100.0 million revolving credit facility under the Amended Senior Secured Credit Facilities incur commitment fees on the undrawn balance of
2%
per annum and
0.5%
per annum respectively.
|
(3)
|
The Company recognized deferred consideration payable as a result of the purchase from Seadrill of the entities that own and operate the
West Vela
on November 4, 2014 and the
West Polaris
on June 19, 2015. The payment of these amounts is contingent on the amount of contract revenues and mobilization revenues received from the customer. For further information on the nature of these payments please see "
Note 3
- Business Acquisitions" of the notes to the Consolidated and Combined Carve-Out Financial Statements in this annual report.
|
Name
|
Age
|
Position
|
Graham Robjohns
|
51
|
Director
|
Bert Bekker
|
77
|
Director and Audit Committee Member
|
Kate Blankenship
|
51
|
Director and Audit Committee Member
|
Harald Thorstein
|
36
|
Director
|
Andrew Cumming
|
61
|
Director and Conflicts Committee Member
|
Keith MacDonald
|
57
|
Director, Audit Committee Member and Conflicts Committee Member
|
Name
|
Age
|
Position
|
Mark Morris (1)
|
52
|
Chief Executive Officer
|
John T. Roche (2)
|
36
|
Chief Financial Officer
|
(1)
|
Mark Morris replaced Graham Robjohns as Chief Executive Officer of the Company in September 2015. Mr. Robjohns had served as Chief Executive Officer since June 2012
|
(2)
|
John Roche replaced Rune Magnus Lundetræ as Chief Financial Officer of the Company in June 2015. Mr. Lundetræ had served as Chief Financial Officer since June 2012
|
Name of Beneficial Owner
|
Common Units
Beneficially Owned
|
|
Subordinated Units
Beneficially Owned
|
|
Percentage of Total Common and Subordinated Units Beneficially Owned
|
|||||||||
|
Number
|
|
Percent
|
|
Number
|
|
Percent
|
|
|
|||||
Seadrill Limited
(1)
|
26,275,750
|
|
|
34.9
|
%
|
|
16,543,350
|
|
|
100.0
|
%
|
|
46.6
|
%
|
OppenheimerFunds, Inc. and Oppenheimer SteelPath MLP Alpha Fund
(2)
|
6,802,915
|
|
|
9.0
|
%
|
|
—
|
|
|
—
|
%
|
|
7.4
|
%
|
Mark Morris (Chief Executive Officer)
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
John Roche (Chief Financial Officer)
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
Graham Robjohns (Director)
|
*
|
|
|
*
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
Bert Bekker (Director)
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
Kate Blankenship (Director)
|
*
|
|
|
*
|
|
|
—
|
|
|
—
|
%
|
|
*
|
|
Harald Thorstein (Director)
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
Andrew Cumming (Director)
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
Keith MacDonald (Director)
|
*
|
|
|
*
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
All directors and executive officers as a group (8 persons)
|
*
|
|
|
*
|
|
|
—
|
|
|
—
|
%
|
|
*
|
|
(1)
|
Seadrill’s principal shareholder is Hemen Holdings Limited. Hemen Holding Limited, a Cyprus Holding Company, and other related companies which are collectively referred to herein as Hemen, the shares of which are held in trusts established by Mr. John Fredriksen for the benefit of his immediate family. Mr. Fredriksen disclaims beneficial ownership of the
119,097,583
shares, or
24.2%
, of the common stock of Seadrill, except to the extent of his voting and dispositive interest in such shares of common stock. Mr. Fredriksen has no pecuniary interest in the shares held by Hemen. In addition to the holdings of shares above, as of
March 31, 2016
, Hemen is party to Total Return Swap agreements relating to
3,900,000
of Seadrill’s common shares.
|
(2)
|
Oppenheimer Funds, Inc. has shared voting power and shared dispositive power as to
6,802,915
common units, which represents
9.0%
of the common units outstanding and
7.4%
of the common and subordinated units outstanding. Oppenheimer SteelPath MLP Alpha Fund has shared voting power and shared dispositive power as to
4,147,646
common units, which represents
5.5%
of the common units outstanding and
4.5%
of the common and subordinated units outstanding. This information is based solely on the Schedule 13G/A filed by Oppenheimer Funds, Inc. and Oppenheimer SteelPath MLP Alpha Fund on February 4, 2016.
|
i.
|
Omnibus agreement
|
ii.
|
Acquisitions
|
iii.
|
Management and administrative services agreements
|
iv.
|
Advisory, Technical and Administrative Services Agreements
|
v.
|
Operating Agreements for Seadrill Operating LP and Seadrill Capricorn Holdings LLC
|
vi.
|
Loans and financing agreements
|
vii.
|
Derivative interest rate swap agreements
|
viii.
|
Bareboat charter agreements
|
(1)
|
acquiring, owning, operating or contracting for Non-Five-Year Drilling Rigs;
|
(2)
|
acquiring one or more Five-Year Drilling Rigs if Seadrill promptly offers to sell the drilling rig to us for the acquisition price plus any administrative costs (including reasonable legal costs) associated with the transfer to us at the time of the acquisition;
|
(3)
|
putting a Non-Five-Year Drilling Rig under contract for five or more years if Seadrill offers to sell the drilling rig to us for fair market value (x) promptly after the time it becomes a Five-Year Drilling Rig and (y) at each renewal or extension of that contract for five or more years;
|
(4)
|
acquiring one or more Five-Year Drilling Rigs as part of the acquisition of a controlling interest in a business or package of assets and owning, operating or contracting for those drilling rigs; provided, however, that:
|
a.
|
if less than a majority of the value of the business or assets acquired is attributable to Five-Year Drilling Rigs, as determined in good faith by Seadrill’s board of directors, Seadrill must offer to sell such drilling rigs to us for their fair market value plus any additional tax or other similar costs that Seadrill incurs in connection with the acquisition and the transfer of such drilling rigs to us separate from the acquired business; and
|
b.
|
if a majority or more of the value of the business or assets acquired is attributable to Five-Year Drilling Rigs, as determined in good faith by Seadrill’s board of directors, Seadrill must notify us of the proposed acquisition in advance. Not later than 10 days following receipt of such notice, the Company will notify Seadrill if the Company wishes to acquire such drilling rigs in cooperation and simultaneously with Seadrill acquiring the Non-Five-Year Drilling Rigs. If the Company does not notify Seadrill of its intent to pursue the acquisition within 10 days, Seadrill may proceed with the acquisition and then offer to sell such drilling rigs to us as provided in (a) above;
|
(5)
|
acquiring a non-controlling interest in any company, business or pool of assets;
|
(6)
|
acquiring, owning, operating or contracting for any Five-Year Drilling Rig if the Company does not fulfill its obligation to purchase such drilling rig in accordance with the terms of any existing or future agreement;
|
(7)
|
acquiring, owning, operating or contracting for a Five-Year Drilling Rig subject to the offers to us described in paragraphs (2), (3) and (4) above pending the Company's determination whether to accept such offers and pending the closing of any offers the Company accepts;
|
(8)
|
providing drilling rig management services relating to any drilling rig;
|
(9)
|
owning or operating a Five-Year Drilling Rig that Seadrill owned and operated as of October 24, 2012, and that was not included in the Company’s initial fleet; or
|
(10)
|
acquiring, owning, operating or contracting for a Five-Year Drilling Rig if the Company has previously advised Seadrill that the Company consents to such acquisition, operation or contract.
|
•
|
certain defects in title to Seadrill’s assets contributed or sold to OPCO and any failure to obtain, prior to the time they were contributed, certain consents and permits necessary to conduct, own and operate such assets, which liabilities arise on or before October 24, 2015 (or, in the case of the
T-15
or the
T-16
, within three years after its purchase of the
T-15
or the
T-16
); and
|
•
|
tax liabilities attributable to the operation of the assets contributed or sold to OPCO prior to the time they were contributed or sold.
|
•
|
Operations Services
: assistance and support for the development of technical standards, supervision of third-party contractors, development of maintenance practices and strategies, development of operating policies, improvement of efficiency, minimizing environmental and safety incidents, periodic auditing of operations and purchasing and logistics;
|
•
|
Technical Supervision Services
: assistance and advice on maintaining vessel classification and compliance with local regulatory requirements, compliance with contractual technical requirements for the drilling units, ensuring that technical operations are professional and satisfactory in every respect;
|
•
|
Accidents-Contingency Plans
: assistance in handling all accidents in the course of operations, and development of a crisis management procedure, and other advice and assistance in connection with crisis response, including crisis communications assistance; and
|
•
|
General Administrative Services
: any general administrative services as needed.
|
•
|
effecting any merger or consolidation involving Seadrill Operating LP or Seadrill Capricorn Holdings LLC;
|
•
|
effecting any sale or exchange of all or substantially all of Seadrill Operating LP or Seadrill Capricorn Holdings LLC's assets;
|
•
|
dissolving or liquidating Seadrill Operating LP or Seadrill Capricorn Holdings LLC;
|
•
|
creating or causing to exist any consensual restriction on the ability of Seadrill Operating LP or Seadrill Capricorn Holdings LLC to make distributions, pay any indebtedness, make loans or advances or transfer assets to us or its subsidiaries;
|
•
|
settling or compromising any claim, dispute or litigation directly against, or otherwise relating to indemnification by Seadrill Operating LP or Seadrill Capricorn Holdings LLC of, any of the directors or officers of Seadrill Operating GP LLC or Seadrill Capricorn Holdings LLC; or
|
•
|
issuing additional interests in Seadrill Operating LP or Seadrill Capricorn Holdings LLC.
|
•
|
The Company's unitholders have no contractual or other legal right to receive distributions other than the obligation under the Company's operating agreement to distribute available cash on a quarterly basis, which is subject to the broad discretion of the Company's board of directors to establish reserves and other limitations.
|
•
|
The board of directors of Seadrill Operating LP’s general partner, Seadrill Operating GP LLC (subject to approval by the Company's board of directors), has authority to establish reserves for the prudent conduct of its business. In addition the Company's board of directors controls Seadrill Capricorn Holdings LLC and Seadrill Partners Operating LLC, and has the authority to establish reserves for the prudent conduct of their respective businesses. The establishment of these reserves could result in a reduction in cash distributions to the Company's unitholders from levels the Company currently anticipates pursuant to the Company's stated cash distribution policy.
|
•
|
The Company's ability to make cash distributions will be limited by restrictions on distributions under its financing agreements. The Company’s financing agreements contain material financial tests and covenants that must be satisfied in order to pay distributions. If the Company is unable to satisfy the restrictions included in any of its financing agreements or is otherwise in default under any of those agreements, it could have a material adverse effect on the Company's ability to make cash distributions to its unitholders, notwithstanding the Company's stated cash distribution policy. These financial tests and covenants are described in this annual report in Item 5 “Operating and Financial Review and Prospects—Liquidity and Capital Resources—Borrowing Activities.”
|
•
|
The Company will be required to make substantial capital expenditures to maintain and replace its fleet. These expenditures may fluctuate significantly over time, particularly as drilling units near the end of their useful lives. In order to minimize these fluctuations, the Company is required to deduct estimated, as opposed to actual, maintenance and replacement capital expenditures from the amount of cash that the Company would otherwise have available for distribution to the Company's unitholders. In years when estimated maintenance and replacement capital expenditures are higher than actual maintenance and replacement capital expenditures, the amount of cash available for distribution to unitholders will be lower than if actual maintenance and replacement capital expenditures were deducted.
|
•
|
Although the Company's operating agreement requires the Company to distribute all of the Company's available cash, the Company's operating agreement, including provisions requiring the Company to make cash distributions, may be amended. During the subordination period, with certain exceptions, the Company's operating agreement may not be amended without the approval of a majority of the units held by non-affiliated common unitholders. After the subordination period has ended, the Company's operating agreement can be amended with the approval of a majority of the outstanding common units, including those held by Seadrill. As of
March 31, 2016
, Seadrill owns approximately
34.9%
of the Company's common units and all of the Company's subordinated units.
|
•
|
Even if the Company's cash distribution policy is not modified or revoked, the amount of distributions the Company pays under the Company's cash distribution policy and the decision to make any distribution is determined by the Company's board of directors, taking into consideration the terms of the Company's operating agreement.
|
•
|
Under Section 40 of the Marshall Islands Act, the Company may not make a distribution to the Company's unitholders if, after giving effect to the distribution, all liabilities of the Company, other than liabilities to members on account of their limited liability company interests and liabilities for which the recourse of creditors is limited to specified property of the Company, exceed the fair value of the assets of the Company, except that the fair value of property that is subject to a liability for which the recourse of creditors is limited shall be included in the assets of the Company only to the extent that the fair value of that property exceeds that liability. Identical restrictions exist on the payment of distributions by OPCO to its members or partners, as applicable.
|
•
|
The Company may lack sufficient cash to pay distributions to the Company's unitholders due to, among other things, changes in the Company's business, including decreases in total operating revenues, decreases in dayrates, the loss of a drilling unit, increases in operating or general and administrative expenses, principal and interest payments on outstanding debt, taxes, working capital requirements, maintenance and replacement capital expenditures or anticipated cash needs. Please read Item 3 “Key Information—Risk Factors” for a discussion of these factors.
|
•
|
distributions of available cash from operating surplus on each of the outstanding common units and subordinated units equaled or exceeded the minimum quarterly distribution for each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date;
|
•
|
the “adjusted operating surplus” (as defined in the partnership agreement) generated during each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date equaled or exceeded the sum of the minimum quarterly distributions on all of the outstanding common units and subordinated units during those periods on a fully diluted weighted average basis during those periods; and
|
•
|
there are no outstanding arrearages in payment of the minimum quarterly distribution on the common units.
|
|
|
|
Marginal Percentage Interest in Distributions
|
||||
|
Total Quarterly Distribution
Target Amount
|
|
Unitholders
|
|
Holders of IDRs
|
||
Minimum Quarterly Distribution
|
$0.3875
|
|
100
|
%
|
|
—
|
%
|
First Target Distribution
|
up to $0.4456
|
|
100
|
%
|
|
—
|
%
|
Second Target Distribution
|
above $0.4456 up to $0.4844
|
|
85
|
%
|
|
15
|
%
|
Third Target Distribution
|
above $0.4844 up to $0.5813
|
|
75
|
%
|
|
25
|
%
|
Thereafter
|
above $0.5813
|
|
50
|
%
|
|
50
|
%
|
|
Amount declared and paid per unit ($)
|
|
Amount declared and paid ($ in millions)
|
||||||||
Period in respect of:
|
Common units
|
Subordinated units
|
|
Common units
|
Subordinated units
|
Incentive distribution rights
|
Total
|
||||
2014 Q4
|
0.5675
|
0.5675
|
|
42.72
|
|
9.39
|
|
3.17
|
|
55.28
|
|
2015 Q1
|
0.5675
|
0.5675
|
|
42.72
|
|
9.39
|
|
3.17
|
|
55.28
|
|
2015 Q2
|
0.5675
|
0.5675
|
|
42.72
|
|
9.39
|
|
3.17
|
|
55.28
|
|
2015 Q3
|
0.5675
|
0.5675
|
|
42.72
|
|
9.39
|
|
3.17
|
|
55.28
|
|
2015 Q4 (1) (2)
|
0.2500
|
0.2500
|
|
18.82
|
|
—
|
|
—
|
|
18.82
|
|
Month Ended
|
High
|
|
Low
|
April 27, 2016 (2)
|
$5.51
|
|
$3.02
|
March 31, 2016
|
$4.74
|
|
$1.70
|
February 29, 2016
|
$3.22
|
|
$1.70
|
January 31, 2016
|
$3.68
|
|
$1.94
|
December 31, 2015
|
$8.62
|
|
$2.92
|
November 30, 2015
|
$12.20
|
|
$8.25
|
October 31, 2015
|
$11.74
|
|
$8.78
|
(1)
|
Contribution and Sale Agreement among Seadrill Partners LLC, Seadrill Member LLC, Seadrill Operating GP LLC, Seadrill Operating LP, Seadrill Capricorn Holdings LLC, Seadrill Opco Sub LLC, Seadrill Americas Inc., Seadrill Offshore AS, and Seadrill UK Ltd., dated as of October 22, 2012, as amended by Amendment No 1, dated June 30, 2013. This agreement effected the transfer of the ownership interests in OPCO to the Company, and the use of the net proceeds of the IPO.
|
(2)
|
Omnibus Agreement among Seadrill Limited, Seadrill Partners LLC, Seadrill Member LLC, Seadrill Operating LP, Seadrill Operating GP LLC, and Seadrill Capricorn, dated as of October 24, 2012. See Item 7 “Major Unitholders and Related Party Transactions-Related Party Transactions-Omnibus Agreement.”
|
(3)
|
Amended and Restated Management and Administrative Services Agreement with Seadrill Management Ltd. See Item 7 “Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreement."
|
(4)
|
Management Services Agreement with Seadrill UK Ltd. See Item 7 “Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements.”
|
(5)
|
Advisory, Technical and Administrative Services Agreement with Seadrill Americas, Inc. See Item 7 “Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements.”
|
(6)
|
Advisory, Technical and Administrative Services Agreement between Seadrill Management AME Ltd and Seadrill Vencedor Ltd. dated January 1, 2012. See Item 7 “Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements.”
|
(7)
|
Advisory, Technical and Administrative Services Agreement between Seadrill Management AME Ltd and Seadrill Deepwater Drillship Ltd. dated January 1, 2012. See Item 7 “Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements.”
|
(8)
|
Administrative, Technical and Advisory Agreement, effective as of January 1, 2012 by and among Seadrill Management AME Ltd. and Seadrill Ghana Operations Ltd. See Item 7 “Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements.”
|
(9)
|
Administrative, Technical and Advisory Agreement, effective as of January 1, 2012 by and among Seadrill Management AME Ltd. and Seadrill Ghana Operations Ltd., effective as of December 13, 2013, by and among Seadrill Americas Inc. and Seadrill Gulf Operations Sirius LLC. See Item 7 “Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements.”
|
(10)
|
Administrative, Technical and Advisory Agreement, effective as of March 21, 2014, by and among Seadrill Americas Inc. and Seadrill Gulf Operations Auriga LLC. See Item 7 “Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements.”
|
(11)
|
Administrative, Technical and Advisory Agreement, effective as of February 15, 2013, between Seadrill Americas Inc. and Seadrill Gulf Operations Vela LLC. See Item 7 “Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements.”
|
(12)
|
Administrative Support Contract, dated July 1, 2014, between Seadrill Mobile Units Nigeria Limited and Seadrill Nigeria Operations Limited. See Item 7 “Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements.”
|
(13)
|
Administrative Support Contract, dated July 1, 2014, between Seadrill Mobile Units Nigeria Limited and Seadrill Offshore Nigeria Limited. See Item 7 “Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements.”
|
(14)
|
Advisory, Technical and Administrative Services Agreement, dated June 19, 2015, between Seadrill Management AME Ltd. and Seadrill Polaris Ltd. See Item 7 “Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements.”
|
(15)
|
Amended and Restated Revolving Loan Agreement, dated August 31, 2013 among Seadrill Operating LP, Seadrill Capricorn Holdings LLC, and Seadrill Partners Operating LLC as borrowers, and Seadrill Limited, as lender, as amended by the Second Amendment to Revolving Loan Agreement, dated March 1, 2014. See Note 11 - “Debt” and Note 13 - “Related party transactions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(16)
|
Amended and Restated US$1,200,000,000 Senior Secured Credit Facility Agreement dated October 10, 2012 for Seadrill Limited, as Borrower, the subsidiaries of Seadrill Limited named therein as guarantors, and the banks and financial institutions named therein as lenders. See Note 11 - “Debt” and Note 13 - “Related party transactions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(17)
|
Loan Agreement dated September 28, 2012 between Seadrill Limited and Seadrill Vencedor Ltd, as amended by Amendment No. 1, dated August 28, 2014, and Amendment No. 2, dated April 14, 2015. See Note 11 - “Debt” and Note 13 - “Related party transactions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(18)
|
US$440,000,000 Secured Credit Facility Agreement dated December 4, 2012 between Seadrill Limited, as borrower, the subsidiaries of Seadrill Limited named therein as guarantors, and the banks and financial institutions named therein as lenders, as amended by the letter agreement, dated June 18, 2015 and the waiver approval letter dated April 28, 2016. See Note 11 - “Debt” and Note 13 - “Related party transactions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(19)
|
Waiver Approval Letter regarding the US$440,000,000 Secured Credit Facility Agreement, dated April 28, 2016.
|
(20)
|
Loan Agreement, dated May 16, 2013, between Seadrill Limited, Seadrill T-15 Ltd., Seadrill Partners Operating LLC and Seadrill International Limited. This is an intercompany loan agreement with Seadrill pursuant to which Seadrill T-15 Ltd. makes payments of principal and interest to the lenders of the $440 Million Rig Financing Agreement on Seadrill’s behalf. See Note 11 - “Debt” and Note 13 - “Related party transactions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(21)
|
Intercompany Loan Agreement, dated May 16, 2013, between Seadrill Limited, as lender and Seadrill Partners Operating LLC, as borrower. Pursuant to this agreement, Seadrill Partners Operating borrowed $109.5 million to fund the acquisition of the entities that own and operate the T-15. See Note 11 - “Debt” and Note 13 - “Related party transactions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(22)
|
Loan Agreement, dated October 11, 2013, by and among Seadrill Limited, Seadrill T-16 Ltd. and Seadrill Partners Operating LLC. Pursuant to this agreement, Seadrill T-16 makes payments of principal and interest directly to the lenders under the $440 Million Rig Financing Agreement on Seadrill's behalf. See Note 11 - “Debt” and Note 13 - “Related party transactions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(23)
|
Amended and Restated Credit Agreement dated as of June 26, 2014, among Seadrill Operating LP, Seadrill Partners Finco LLC, Seadrill Capricorn Holdings LLC, various lenders and Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent. See Note 11 - “Debt” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(24)
|
Second Amended and Restated $1,450 Million Senior Secured Credit Facility Agreement, dated as of November 4, 2014, among Seadrill Tellus Ltd. and Seadrill Vela Hungary Kft., as Borrowers, Seadrill Limited, as Parent, the guarantors party thereto, ING Bank N.V., as Agent, the lenders party thereto and the other parties thereto, as amended by the letter agreement, dated May 28, 2015 and the waiver approval letter dated April 28, 2016. See Note 11 - “Debt” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(25)
|
Waiver Approval Letter regarding the Second Amended and Restated Agreement, dated April 28, 2016.
|
(26)
|
On Demand and Guarantee and Indemnity, dated November 4, 2014, between Seadrill Partners LLC and ING Bank N.V. Pursuant to this agreement, Seadrill Partners LLC has guaranteed the obligations of Seadrill Vela Hungary Kft. under the $1,450 Million Senior Secured Credit Facility Agreement, dated as of November 4, 2014, among Seadrill Tellus Ltd. and Seadrill Vela Hungary Kft., as Borrowers, Seadrill Limited, as Parent, the guarantors party thereto, ING Bank N.V., as Agent, the lenders party thereto and the other parties thereto, in an amount up to $497.5 million plus interest and costs.
|
(27)
|
Amendment and Restatement Agreement, dated June 19, 2015, between Seadrill Polaris Ltd. as borrower, Seadrill Limited as parent, Ship Finance International Limited as retiring guarantor and the other companies listed therein as guarantors, the banks and financial institutions listed therein as lenders, DNB Bank ASA and Nordea Bank AB, London Branch as bookrunners, the banks and financial institutions named therein as mandated lead arrangers and DNB Bank ASA, as agent, relating to the US$420,000,000 Term Loan and Revolving Credit Facilities Agreement, originally dated December 28, 2012, as previously amended. See Note 11 - “Debt” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report and as amended by the waiver approval letter dated April 28, 2016.
|
(28)
|
Waiver Approval Letter regarding the Amendment and Restatement Agreement, dated April 9, 2016.
|
(29)
|
Loan Agreement, dated April 28, 2016, between Seadrill Hungary Kft and Seadrill Limited. See Item 7 “Major Unitholders and Related Party Transactions-Related Party Transactions-Loans and Financing Agreements-$143 Million Loan Agreement.”
|
(30)
|
Loan Agreement, dated April 28, 2016, between Seadrill Neptune Hungary Kft and Seadrill Gulf Operations Sirius LLC. See Item 7 “Major Unitholders and Related Party Transactions-Related Party Transactions-Loans and Financing Agreements-$143 Million Loan Agreement.”
|
(31)
|
Bareboat Charter Agreement between Seadrill Offshore AS and Seadrill Canada Ltd. dated October 5, 2012. See Note 13 - “Related party transactions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(32)
|
Bareboat Charter Agreements between Seadrill China Operations Ltd. and Seadrill Offshore AS dated October 5, 2012. See Note 13 - “Related party transactions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(33)
|
Rig Rental Agreement, effective as of December 10, 2012, by and among Seadrill T-15 Ltd. and Seadrill UK Ltd. See Note 13 - “Related party transactions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(34)
|
Rig Rental Agreement, effective as of December 10, 2012, by and among Seadrill T-16 Ltd. and Seadrill UK Ltd. See Note 13 - “Related party transactions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(35)
|
Rig Rental Agreement, effective as of December 10, 2012, by and among Seadrill International Ltd. and Seadrill UK Ltd., relating to the T-15. See Note 13 - “Related party transactions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(36)
|
Rig Rental Agreement, effective as of December 10, 2012, by and among Seadrill International Ltd. and Seadrill UK Ltd., relating to the T-16. See Note 13 - “Related party transactions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(37)
|
Purchase and Sale Agreement, dated May 7, 2013, between Seadrill Limited and Seadrill Partners Operating LLC. Pursuant to this agreement, Seadrill Partners Operating LLC purchased the equity interest in each of the entities that own and operate the T-15. See Note 3 - “Business acquisitions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(38)
|
Purchase and Sale Agreement, dated October 11, 2013, by and among Seadrill Limited, Seadrill Partners LLC and Seadrill Partners Operating LLC. Pursuant to this agreement, Seadrill Partners Operating purchased the equity interests in the entity that owns the T-16. See Note 3 - “Business acquisitions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(39)
|
Contribution, Purchase and Sale Agreement, dated December 2, 2013, as amended by Amendment to Contribution, Purchase and Sale Agreement, dated as of December 12, 2013, by and among Seadrill Limited, a Bermuda exempted company Seadrill Partners LLC, Seadrill Operating LP, Seadrill Capricorn Holdings LLC, and Seadrill Americas Inc. Pursuant to this agreement, as amended, Seadrill Operating LP acquired all of the ownership interests in each of the entities that own, operate and manage the semi-submersible drilling rig,
West Leo
and Seadrill Capricorn Holdings LLC acquired all of the ownership interests in each of the entities that own and operate the semi-submersible drilling rig,
West Sirius
. See Note 3 - “Business acquisitions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(40)
|
Contribution, Purchase and Sale Agreement, dated March 11, 2014. Pursuant to this agreement, Seadrill Capricorn Holdings LLC acquired the entities that own and operate the
West Auriga
. See Note 3 - “Business acquisitions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(41)
|
Promissory Discount Note, dated March 21, 2014 issued by Seadrill Capricorn Holdings LLC. See Note 3 - “Business acquisitions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(42)
|
Limited Partner Interest Purchase Agreement, dated as of July 17, 2014, between Seadrill Limited and Seadrill Partners LLC. Pursuant to this agreement, the Company purchased an additional 28% limited partner interest in Seadrill Operating LP. See Note 13 - “Related party transactions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(43)
|
Contribution, Purchase and Sale Agreement, dated November 4, 2014, by and among Seadrill Limited, Seadrill Partners LLC, Seadrill Capricorn Holdings LLC and Seadrill Americas Inc. Pursuant to this agreement, Seadrill Capricorn Holdings LLC acquired the entities that own and operate the
West Vela
. See Note 3 - “Business acquisitions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(44)
|
Purchase and Sale Agreement, dated as of June 16, 2015, by and among Seadrill Limited, Seadrill Operating LP, Seadrill Polaris Ltd. See Note 3 - “Business Acquisitions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(45)
|
Promissory Note, dated as of June 19, 2015, between Seadrill Operating LP and Seadrill Limited. See Note 3 - “Business acquisitions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
(46)
|
Guaranty, dated as of June 19, 2015, between Seadrill Partners LLC as the guarantor and Seadrill Limited as the holder. See Note 3 - “Business acquisitions” to the Consolidated and Combined Carve-Out Financial Statements included in this annual report.
|
•
|
an individual U.S. citizen or resident (as determined for U.S. federal income tax purposes),
|
•
|
a corporation (or other entity that is classified as a corporation for U.S. federal income tax purposes) organized under the laws of the United States or any of its political subdivisions,
|
•
|
an estate the income of which is subject to U.S. federal income taxation regardless of its source, or
|
•
|
a trust if (i) a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) the trust has a valid election in effect to be treated as a U.S. person for U.S. federal income tax purposes.
|
•
|
at least
75%
of the Company's gross income (including the gross income of the Company's drilling unit owning subsidiaries) for such taxable year consists of passive income (e.g., dividends, interest, capital gains from the sale or exchange of investment property and rents derived other than in the active conduct of a rental business); or
|
•
|
at least
50%
of the average value of the assets held by the Company (including the assets of the Company's drilling unit owning subsidiaries) during such taxable year produce, or are held for the production of, passive income.
|
•
|
the excess distribution or gain would be allocated ratably over the Non-Electing Holder’s aggregate holding period for the common units;
|
•
|
the amount allocated to the current taxable year and any taxable year prior to the taxable year the Company was first treated as a PFIC with respect to the Non-Electing Holder would be taxed as ordinary income; and
|
•
|
the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayers for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.
|
•
|
fails to provide an accurate taxpayer identification number;
|
•
|
is notified by the IRS that it has failed to report all interest or corporate distributions required to be reported on its U.S. federal income tax returns; or
|
•
|
in certain circumstances, fails to comply with applicable certification requirements.
|
•
|
such holders do not use or hold and are not deemed or considered to use or hold their common units in the course of carrying on a trade, profession or vocation in the United Kingdom; and
|
•
|
such holders do not have a branch or agency or permanent establishment in the United Kingdom through which such common units are used, held or acquired.
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||||
(In millions of US dollars)
|
Outstanding
principal
|
|
Fair Value
|
|
Outstanding
Principal
|
|
Fair Value
|
||||||||
Related party receivables (payables) - interest rate swap agreements
|
$
|
655.3
|
|
|
$
|
2.2
|
|
|
$
|
690.1
|
|
|
$
|
6.0
|
|
Other current assets (liabilities) - interest rate swap agreements
|
$
|
2,851.9
|
|
|
$
|
(84.2
|
)
|
|
$
|
2,881.7
|
|
|
$
|
(56.1
|
)
|
•
|
the measurement of monetary assets and liabilities denominated in foreign currencies converted to US Dollars, with the resulting gain or loss recorded as “Foreign exchange gain/(loss);”
|
•
|
the impact of fluctuations in exchange rates on the reported amounts of the Company's revenues and expenses which are denominated in foreign currencies; and
|
•
|
foreign subsidiaries whose accounts are not maintained in U.S. Dollars, which when converted into US Dollars can result in exchange adjustments, which are recorded as a component in shareholders’ equity.
|
•
|
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
•
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that the Company's receipts and expenditures are being made only in accordance with authorizations of Company's management and directors; and
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
|
|
2015
|
|
2014
|
||||
Audit Fees
|
$
|
912,000
|
|
|
$
|
1,205,808
|
|
Audit-Related Fees
|
—
|
|
|
—
|
|
||
Tax Fees
|
—
|
|
|
—
|
|
||
All other fees
|
—
|
|
|
—
|
|
||
|
$
|
912,000
|
|
|
$
|
1,205,808
|
|
Exhibit
Number
|
Description
|
1.1
|
Certificate of Formation of Seadrill Partners LLC (incorporated by reference to Exhibit 3.1 to the registrant’s Registration Statement on Form F-1 (File No. 333-184023), filed on September 21, 2012)
|
1.2
|
First Amended and Restated Operating Agreement of Seadrill Partners LLC, dated October 24, 2012, (incorporated by reference to Exhibit 1.2 of the registrant's Annual Report on Form 20-F for the year ended December 31, 2012, filed on April 30, 2013)
|
1.2.1
|
Amendment No. 1 to the First Amended and Restated Operating Agreement of Seadrill Partners LLC, dated February 23, 2014 (incorporated by reference to Exhibit 1.2.1 of the registrant's Annual Report on Form 20-F for the year ended December 31, 2014, filed on April 21, 2015)
|
1.3
|
Amended and Restated Agreement of Limited Partnership of Seadrill Operating LP dated July 21, 2014 (incorporated by reference to Exhibit 10.2 of the registrant’s Current Report on Form 6-K for the month of July, filed on July 21, 2014)
|
1.4
|
Limited Liability Company Agreement of Seadrill Operating GP LLC, dated September 27, 2012 (incorporated by reference to Exhibit 1.4 of the registrant’s Annual Report on Form 20-F for the year ended December 31, 2012, filed on April 30, 2013)
|
1.5
|
Amended & Restated Limited Liability Company Agreement of Seadrill Capricorn Holdings LLC dated October 18, 2012 (incorporated by reference to Exhibit 1.5 of the registrant’s Annual Report on Form 20-F for the year ended December 31, 2012, filed on April 30, 2013)
|
4.1.
|
Contribution and Sale Agreement among Seadrill Partners LLC, Seadrill Member LLC, Seadrill Operating GP LLC, Seadrill Operating LP, Seadrill Capricorn Holdings LLC, Seadrill Opco Sub LLC, Seadrill Americas Inc., Seadrill Offshore AS, and Seadrill UK Ltd., dated as of October 22, 2012 (incorporated by reference to Exhibit 4.1 of the registrant’s Annual Report on Form 20-F for the year ended December 31, 2012, filed on April 30, 2013)
|
4.1.1
|
Amendment No. 1 to Contribution and Sale Agreement among Seadrill Partners LLC, Seadrill Member LLC, Seadrill Operating GP LLC, Seadrill Operating LP, Seadrill Capricorn Holdings LLC, Seadrill Opco Sub LLC, Seadrill Americas Inc., Seadrill Offshore AS, and Seadrill UK Ltd., dated as of June 30, 2013 (incorporated by reference to the Exhibit 10.1 of the registrant’s Report on Form 6-K for the six month period ended June 30, 2013, filed on September 30, 2013)
|
4.2
|
Omnibus Agreement among Seadrill Limited, Seadrill Partners LLC, Seadrill Member LLC, Seadrill Operating LP, Seadrill Operating GP LLC, and Seadrill Capricorn, dated as of October 24, 2012 (incorporated by reference to Exhibit 4.2 of the registrant’s Annual Report on Form 20-F for the year ended December 31, 2012, filed on April 30, 2013)
|
4.3*
|
Novation and Amendment Agreement in respect of the Management and Administrative Services Agreement among Seadrill Management AS, Seadrill Management Ltd and Seadrill Partners LLC, dated October 24 2012, as amended April 28, 2016
|
4.4
|
Advisory, Technical and Administrative Services Agreement with Seadrill Americas, Inc. (incorporated by reference to Exhibit 4.4 of the registrant’s Annual Report on Form 20-F for the year ended December 31, 2012, filed on April 30, 2013)
|
4.5
|
Advisory, Technical and Administrative Services Agreement between Seadrill Management AME Ltd and Seadrill Vencedor Ltd. dated January 1, 2012 (incorporated by reference to Exhibit 10.5.1 of Amendment No. 3 to the registrant’s Registration Statement on Form F-1 (File No. 333-184023), filed on October 17, 2012)
|
4.6
|
Advisory, Technical and Administrative Services Agreement between Seadrill Management AME Ltd and Seadrill Deepwater Drillship Ltd. dated January 1, 2012 (incorporated by reference to Exhibit 10.5.2 of Amendment No. 3 to the registrant’s Registration Statement on Form F-1 (File No. 333-184023), filed on October 17, 2012)
|
4.7
|
Administrative, Technical and Advisory Agreement, effective as of January 1, 2012 by and among Seadrill Management AME Ltd. and Seadrill Ghana Operations Ltd., effective as of December 13, 2013, by and among Seadrill Americas Inc. and Seadrill Gulf Operations Sirius LLC (incorporated by reference to the Exhibit 10.4 of the registrant’s Report on Form 6-K for the month of March 2014, filed on March 11, 2014)
|
4.8
|
Administrative, Technical and Advisory Agreement, effective as of January 1, 2012 by and among Seadrill Management AME Ltd. and Seadrill Ghana Operations Ltd., effective as of December 13, 2013, by and among Seadrill Americas Inc. and Seadrill Gulf Operations Sirius LLC (incorporated by reference to Exhibit 10.5 of the registrant’s Report on Form 6-K for the month of March 2014, filed on March 11, 2014)
|
4.9
|
Administrative, Technical and Advisory Agreement, effective as of March 21, 2014 between Seadrill Americas Inc. and Seadrill Gulf Operations Auriga LLC. (incorporated by reference to Exhibit 4.7.5 of the registrant's Annual Report on Form 20-F for the year ended December 31, 2013, filed on April 30, 2014).
|
4.10
|
Administrative, Technical and Advisory Agreement, effective as of February 15, 2013, between Seadrill Americas Inc. and Seadrill Gulf Operations Vela LLC (incorporated by reference to Exhibit 4.7.6 of the registrant's Annual Report on Form 20-F for the year ended December 31, 2014, filed on April 21, 2015).
|
4.11
|
Administrative Support Contract, dated July 1, 2014, between Seadrill Mobile Units Nigeria Limited and Seadrill Nigeria Operations Limited. (incorporated by reference to the Exhibit 10.1 of the registrant’s Report on Form 6-K for the six month period ended June 30, 2015, filed on October 5, 2015)
|
4.12
|
Administrative Support Contract, dated July 1, 2014, between Seadrill Mobile Units Nigeria Limited and Seadrill Offshore Nigeria Limited. (incorporated by reference to the Exhibit 10.2 of the registrant’s Report on Form 6-K for the six month period ended June 30, 2015, filed on October 5, 2015)
|
4.13
|
Advisory, Technical and Administrative Services Agreement, dated June 19, 2015, between Seadrill Management AME Ltd. and Seadrill Polaris Ltd. (incorporated by reference to the Exhibit 10.4 of the registrant’s Report on Form 6-K for the three month period ended March 31, 2015, filed on July 2, 2015)
|
4.14
|
Amended and Restated Revolving Loan Agreement, dated August 31, 2013, among Seadrill Operating LP, Seadrill Capricorn Holdings LLC and Seadrill Partners Operating LLC, as borrowers, and Seadrill Limited, as lender (incorporated by reference to the Exhibit 10.1 of the registrant’s Report on Form 6-K for the six month period ended June 30, 2013, filed on September 30, 2013)
|
4.14.1
|
Second Amendment to Revolving Loan Agreement, dated March 1, 2014, among Seadrill Operating LP, Seadrill Capricorn Holdings LLC and Seadrill Partners Operating LLC, as borrowers, and Seadrill Limited, as lender (incorporated by reference to Exhibit 4.8.3 of the registrant’s Annual Report on Form 20-F for the year ended December 31, 2013, filed on April 30, 2014)
|
4.15
|
Amended and Restated US$1,200,000,000 Senior Secured Credit Facility Agreement dated October10, 2012 for Seadrill Limited, as Borrower, the subsidiaries of Seadrill Limited named therein as guarantors, and the banks and financial institutions named therein as lenders, dated October 10, 2012 (incorporated by reference to Exhibit 10.9 of Amendment No. 3 to the registrant’s Registration Statement on Form F-1 (File No. 333-184023), filed on October 17, 2012)
|
4.16
|
Loan Agreement dated September 28, 2012 between Seadrill Limited and Seadrill Vencedor Ltd. (incorporated by reference to Exhibit 10.15 of Amendment No. 1 to the registrant’s Registration Statement on Form F-1 (File No. 333-184023), filed on October 5, 2012)
|
Exhibit
Number
|
Description
|
4.16.1
|
Amendment to the Loan Agreement between Seadrill Limited and Seadrill Vencedor Limited dated August 28, 2014 (incorporated by reference to Exhibit 4.42 of the registrant's Annual Report on Form 20-F for the year ended December 31, 2014, filed on April 21, 2015)
|
4.16.2
|
Amendment to the Loan Agreement between Seadrill Limited and Seadrill Vencedor Limited dated April 14, 2015(incorporated by reference to Exhibit 4.43 of the registrant's Annual Report on Form 20-F for the year ended December 31, 2014, filed on April 21, 2015)
|
4.17
|
US$440,000,000 Secured Credit Facility Agreement dated December 4, 2012 between Seadrill Limited, as borrower, the subsidiaries of Seadrill Limited named therein as guarantors, and the banks and financial institutions named therein as lenders(incorporated by reference to the Exhibit 10.1 of the registrant’s Report on Form 6-K for the six months ended June 30, 2013, filed on September 30, 2013)
|
4.17.1*
|
Letter Agreement regarding the US$440,000,000 Secured Credit Facility Agreement, dated June 18, 2015
|
4.17.2*
|
Waiver Approval Letter regarding the US$440,000,000 Secured Credit Facility Agreement, dated April 28, 2016
|
4.18
|
Loan Agreement, dated May 16, 2013, between Seadrill Limited, Seadrill T-15 Ltd., Seadrill Partners Operating LLC and Seadrill International Limited (incorporated by reference to the Exhibit 10.3 of the registrant’s Report on Form 6-K for the six months ended June 30, 2013, filed on September 30, 2013)
|
4.19
|
Intercompany Loan Agreement, dated May 16, 2013, between Seadrill Limited, as lender and Seadrill Partners Operating LLC, as borrower (incorporated by reference to the Exhibit 10.4 of the registrant’s Report on Form 6-K for the six months ended June 30, 2013, filed on September 30, 2013)
|
4.20
|
Loan Agreement, dated October 11, 2013, by and among Seadrill Limited, Seadrill T-16 Ltd. and Seadrill Partners Operating LLC (incorporated by reference to Exhibit 10.6 of the registrant’s Registration Statement on Form F-3 (File No. 333-192053), filed on November 1, 2013)
|
4.21
|
Amended and Restated Credit Agreement dated as of June 26, 2014, among Seadrill Operating LP, Seadrill Partners Finco LLC, Seadrill Capricorn Holdings LLC, various lenders and Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent (incorporated by reference to the Exhibit 10.1 of the registrant’s Report on Form 6-K for the month of June, filed on June 30, 2014)
|
4.22
|
Second Amended and Restated Agreement dated November 4, 2014, among Seadrill Tellus Ltd. and Seadrill Vela Hungary Kft., as Borrowers, Seadrill Limited, as Parent, the guarantors party thereto, ING Bank N.V., as Agent, the lenders party thereto and the other parties thereto, relating to the US$1,450,000,000 Senior Secured Credit Facility Agreement, originally dated March 20, 2013 (incorporated by reference to Exhibit 4.40 of the registrant's Annual Report on Form 20-F for the year ended December 31, 2014, filed on April 21, 2015)
|
4.22.1*
|
Letter Agreement regarding the Second Amended and Restated Agreement, dated May 28, 2015
|
4.22.2*
|
Waiver Approval Letter regarding the Second Amended and Restated Agreement, dated April 28, 2016
|
4.23
|
On Demand and Guarantee and Indemnity, dated November 4, 2014, between Seadrill Partners LLC and ING Bank N.V. (incorporated by reference to Exhibit 4.41 of the registrant's Annual Report on Form 20-F for the year ended December 31, 2014, filed on April 21, 2015)
|
4.24
|
Amendment and Restatement Agreement, dated June 19, 2015, between Seadrill Polaris Ltd. as borrower, Seadrill Limited as parent, Ship Finance International Limited as retiring guarantor and and the other companies listed therein as guarantors, the banks and financial institutions listed therein as lenders, DNB Bank ASA and Nordea Bank AB, London Branch as bookrunners, the banks and financial institutions named therein as mandated lead arrangers and DNB Bank ASA, as agent, relating to the US$420,000,000 Term Loan and Revolving Credit Facilities Agreement, originally dated December 28, 2012, as previously amended (incorporated by reference to the Exhibit 10.5 of the registrant’s Report on Form 6-K for the three month period ended March 31, 2015, filed on July 2, 2015)
|
4.24.1*
|
Waiver Approval Letter regarding the Amendment and Restatement Agreement, dated April 28, 2016
|
4.25*
|
Loan Agreement, dated April 28, 2016, between Seadrill Hungary Kft and Seadrill Limited
|
4.26*
|
Loan Agreement, dated April 28, 2016, between Seadrill Neptune Hungary Kft and Seadrill Gulf Operations Sirius LLC
|
4.27
|
Bareboat Charter Agreement between Seadrill Offshore AS and Seadrill Canada Ltd. dated October 5, 2012 (incorporated by reference to Exhibit 10.16 of Amendment No. 3 to the registrant’s Registration Statement on Form F-1 (File No. 333-184023), filed on October 17, 2012)
|
4.28
|
Bareboat Charter Agreements between Seadrill China Operations Ltd. and Seadrill Offshore AS dated October 5, 2012 (incorporated by reference to Exhibit 10.17 of Amendment No. 3 to the registrant’s Registration Statement on Form F-1 (File No. 333-184023), filed on October 17, 2012)
|
4.29
|
Rig Rental Agreement, effective as of December 10, 2012, by and among Seadrill T-15 Ltd. and Seadrill UK Ltd. (incorporated by reference to Exhibit 10.1 of Amendment No. 3 to the registrant’s Registration Statement on Form F-3 (File No. 333-192053), filed on November 1, 2013)
|
4.30
|
Rig Rental Agreement, effective as of December 10, 2012, by and among Seadrill T-16 Ltd. and Seadrill UK Ltd. (incorporated by reference to Exhibit 10.2 of the registrant’s Registration Statement on Form F-3 (File No. 333-192053), filed on November 1, 2013)
|
4.31
|
Rig Rental Agreement, effective as of December 10, 2012, by and among Seadrill International Ltd. and Seadrill UK Ltd., relating to the
T-15
(incorporated by reference to Exhibit 10.3 of the registrant’s Registration Statement on Form F-3 (File No. 333-192053), filed on November 1, 2013)
|
4.32
|
Rig Rental Agreement, effective as of December 10, 2012, by and among Seadrill International Ltd. and Seadrill UK Ltd., relating to the
T-16
(incorporated by reference to Exhibit 10.2 of the registrant’s Registration Statement on Form F-3 (File No. 333-192053), filed on November 1, 2013)
|
4.33
|
Purchase and Sale Agreement, dated May 7, 2013, between Seadrill Limited and Seadrill Partners Operating LLC (incorporated by reference to the Exhibit 10.5 of the registrant’s Report on Form 6-K for the six months ended June 30, 2013, filed on September 30, 2013)
|
4.34
|
Purchase and Sale Agreement, dated October 11, 2013, by and among Seadrill Limited, Seadrill Partners LLC and Seadrill Partners Operating LLC (incorporated by reference to Exhibit 10.5 of the registrant’s Registration Statement on Form F-3 (File No. 333-192053), filed on November 1, 2013)
|
4.35
|
Contribution, Purchase and Sale Agreement, dated December 2, 2013 (incorporated by reference to the Exhibit 10.2 of the registrant’s Report on Form 6-K for the month of December, filed on December 9, 2013)
|
4.35.1
|
Amendment to Contribution, Purchase and Sale Agreement, dated as of December 12, 2013, by and among Seadrill Limited, a Bermuda exempted company Seadrill Partners LLC, Seadrill Operating LP, Seadrill Capricorn Holdings LLC, and Seadrill Americas Inc. (incorporated by reference to the Exhibit 10.1 of the registrant’s Report on Form 6-K for the month of March, filed on March 11, 2014)
|
4.36
|
Contribution, Purchase and Sale Agreement, dated March 11, 2014 (incorporated by reference to the Exhibit 10.2 of the registrant’s Report on Form 6-K for the month of March, filed on March 17, 2014)
|
4.37
|
Promissory Discount Note, dated March 21, 2014 issued by Seadrill Capricorn Holdings LLC (incorporated by reference to Exhibit 4.37 of the registrant’s Annual Report on Form 20-F for the year ended December 31, 2013, filed on April 30, 2014)
|
Exhibit
Number
|
Description
|
4.38
|
Limited Partner Interest Purchase Agreement, dated as of July 17, 2014, between Seadrill Limited and Seadrill Partners LLC (incorporated by reference to Exhibit 10.1 of the registrant’s Report on Form 6-K for the month of July, filed on July 21, 2014.
|
4.39
|
Contribution, Purchase and Sale Agreement, dated November 4, 2014, by and among Seadrill Limited, Seadrill Partners LLC, Seadrill Capricorn Holdings LLC and Seadrill Americas Inc. (incorporated by reference to Exhibit 4.39 of the registrant's Annual Report on Form 20-F for the year ended December 31, 2014, filed on April 21, 2015)
|
4.40
|
Purchase and Sale Agreement, dated as of June 16, 2015, by and among Seadrill Limited, Seadrill Operating LP, Seadrill Polaris Ltd. (incorporated by reference to the Exhibit 10.1 of the registrant’s Report on Form 6-K for the three month period ended March 31, 2015, filed on July 2, 2015)
|
4.41
|
Promissory Note, dated as of June 19, 2015, between Seadrill Operating LP and Seadrill Limited (incorporated by reference to the Exhibit 10.2 of the registrant’s Report on Form 6-K for the three month period ended March 31, 2015, filed on July 2, 2015)
|
4.42
|
Guaranty, dated as of June 19, 2015, between Seadrill Partners LLC as the guarantor and Seadrill Limited as the holder (incorporated by reference to the Exhibit 10.3 of the registrant’s Report on Form 6-K for the three month period ended March 31, 2015, filed on July 2, 2015)
|
8.1*
|
List of Subsidiaries of Seadrill Partners LLC
|
12.1*
|
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
|
12.2*
|
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial and Accounting Officer
|
13.1*
|
Certification under Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer
|
13.2*
|
Certification under Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Financial and Accounting Officer
|
15.1*
|
Consent of Independent Registered Public Accounting Firm - PricewaterhouseCoopers LLP
|
101. INS**
|
XBRL Instance Document
|
101. SCH**
|
XBRL Taxonomy Extension Schema
|
101. CAL**
|
XBRL Taxonomy Extension Schema Calculation Linkbase
|
101. DEF**
|
XBRL Taxonomy Extension Schema Definition Linkbase
|
101. LAB**
|
XBRL Taxonomy Extension Schema Label Linkbase
|
101. PRE**
|
XBRL Taxonomy Extension Schema Presentation Linkbase
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Operating revenues
|
|
|
|
|
|
|
||||||
Contract revenues
|
|
$
|
1,603.6
|
|
|
$
|
1,302.7
|
|
|
$
|
1,047.1
|
|
Reimbursable revenues
|
|
49.9
|
|
|
39.9
|
|
|
11.4
|
|
|||
Other revenues
|
*
|
88.1
|
|
|
—
|
|
|
5.8
|
|
|||
Total operating revenues
|
|
1,741.6
|
|
|
1,342.6
|
|
|
1,064.3
|
|
|||
|
|
|
|
|
|
|
||||||
Operating expenses
|
|
|
|
|
|
|
||||||
Vessel and rig operating expenses
|
*
|
495.5
|
|
|
425.0
|
|
|
375.2
|
|
|||
Amortization of favorable contracts
|
|
66.9
|
|
|
14.8
|
|
|
—
|
|
|||
Reimbursable expenses
|
|
45.7
|
|
|
37.9
|
|
|
10.6
|
|
|||
Depreciation and amortization
|
|
237.5
|
|
|
198.7
|
|
|
141.2
|
|
|||
General and administrative expenses
|
*
|
52.3
|
|
|
51.4
|
|
|
49.6
|
|
|||
Total operating expenses
|
|
897.9
|
|
|
727.8
|
|
|
576.6
|
|
|||
|
|
|
|
|
|
|
||||||
Operating income
|
|
843.7
|
|
|
614.8
|
|
|
487.7
|
|
|||
|
|
|
|
|
|
|
||||||
Financial items
|
|
|
|
|
|
|
||||||
Interest income
|
|
9.8
|
|
|
3.7
|
|
|
4.4
|
|
|||
Interest expense
|
*
|
(192.5
|
)
|
|
(140.9
|
)
|
|
(92.2
|
)
|
|||
(Loss)/gain on derivative financial instruments
|
*
|
(82.9
|
)
|
|
(124.9
|
)
|
|
49.9
|
|
|||
Currency exchange gain / (loss)
|
|
1.6
|
|
|
(3.3
|
)
|
|
(1.2
|
)
|
|||
Gain on bargain purchase
|
*
|
9.3
|
|
|
—
|
|
|
—
|
|
|||
Total financial items
|
|
(254.7
|
)
|
|
(265.4
|
)
|
|
(39.1
|
)
|
|||
|
|
|
|
|
|
|
||||||
Income before income taxes
|
|
589.0
|
|
|
349.4
|
|
|
448.6
|
|
|||
Income taxes
|
|
(100.6
|
)
|
|
(34.8
|
)
|
|
(33.2
|
)
|
|||
Net income
|
|
$
|
488.4
|
|
|
$
|
314.6
|
|
|
$
|
415.4
|
|
Net income attributable to the non-controlling interest
|
|
(231.2
|
)
|
|
(176.4
|
)
|
|
(271.0
|
)
|
|||
Net income attributable to Seadrill Partners LLC owners
|
|
$
|
257.2
|
|
|
$
|
138.2
|
|
|
$
|
144.4
|
|
|
|
|
|
|
|
|
||||||
Earnings per unit (basic and diluted)
|
|
|
|
|
|
|
||||||
Common unitholders
|
|
$
|
2.45
|
|
|
$
|
1.75
|
|
|
$
|
2.15
|
|
Subordinated unitholders
|
|
$
|
2.45
|
|
|
$
|
1.75
|
|
|
$
|
1.83
|
|
|
|
2015
|
|
2014
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
319.0
|
|
|
$
|
242.7
|
|
Accounts receivables, net
|
|
278.3
|
|
|
294.5
|
|
||
Amount due from related party
|
|
128.1
|
|
|
62.7
|
|
||
Other current assets
|
|
166.6
|
|
|
129.3
|
|
||
Total current assets
|
|
892.0
|
|
|
729.2
|
|
||
Non-current assets:
|
|
|
|
|
||||
Drilling units
|
|
5,547.3
|
|
|
5,141.1
|
|
||
Goodwill
|
|
3.2
|
|
|
3.2
|
|
||
Deferred tax assets
|
|
34.2
|
|
|
18.4
|
|
||
Amount due from related party
|
|
50.0
|
|
|
—
|
|
||
Other non-current assets
|
|
314.4
|
|
|
376.2
|
|
||
Total non-current assets
|
|
5,949.1
|
|
|
5,538.9
|
|
||
Total assets
|
|
$
|
6,841.1
|
|
|
$
|
6,268.1
|
|
|
|
|
|
|
||||
LIABILITIES AND MEMBERS’ CAPITAL
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Current portion of long-term debt
|
|
$
|
93.8
|
|
|
$
|
68.9
|
|
Current portion of long-term related party debt
|
|
145.8
|
|
|
40.4
|
|
||
Trade accounts payable and accruals
|
|
24.1
|
|
|
7.9
|
|
||
Current portion of deferred and contingent consideration to related party
|
|
60.4
|
|
|
25.8
|
|
||
Related party payable
|
|
304.7
|
|
|
250.0
|
|
||
Other current liabilities
|
|
217.9
|
|
|
227.4
|
|
||
Total current liabilities
|
|
846.7
|
|
|
620.4
|
|
||
Non-current liabilities:
|
|
|
|
|
||||
Long-term debt
|
|
3,440.4
|
|
|
3,156.6
|
|
||
Long-term related party debt
|
|
160.2
|
|
|
306.1
|
|
||
Deferred and contingent consideration to related party
|
|
185.4
|
|
|
111.2
|
|
||
Deferred tax liability
|
|
43.7
|
|
|
—
|
|
||
Long-term related party payable
|
|
50.0
|
|
|
—
|
|
||
Other non-current liabilities
|
|
17.3
|
|
|
29.5
|
|
||
Total non-current liabilities
|
|
3,897.0
|
|
|
3,603.4
|
|
||
|
|
|
|
|
||||
Commitments and contingencies (see note 15)
|
|
|
|
|
|
|
||
Equity
|
|
|
|
|
||||
Members’ Capital:
|
|
|
|
|
|
|
||
Common unitholders (issued 75,278,250 units)
|
|
945.5
|
|
|
913.3
|
|
||
Subordinated unitholders (issued 16,543,350 units)
|
|
18.8
|
|
|
11.7
|
|
||
Seadrill member interest
|
|
—
|
|
|
3.2
|
|
||
Total members’ capital
|
|
964.3
|
|
|
928.2
|
|
||
Non-controlling interest
|
|
1,133.1
|
|
|
1,116.1
|
|
||
Total equity
|
|
2,097.4
|
|
|
2,044.3
|
|
||
Total liabilities and equity
|
|
$
|
6,841.1
|
|
|
$
|
6,268.1
|
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Cash Flows from Operating Activities
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
488.4
|
|
|
$
|
314.6
|
|
|
$
|
415.4
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
237.5
|
|
|
198.7
|
|
|
141.2
|
|
|||
Amortization of deferred loan charges
|
|
20.2
|
|
|
17.6
|
|
|
7.1
|
|
|||
Amortization of favorable contracts
|
|
66.9
|
|
|
14.8
|
|
|
—
|
|
|||
Gain on bargain purchase
|
|
(9.3
|
)
|
|
—
|
|
|
—
|
|
|||
Unrealized loss / (gain) related to derivative financial instruments
|
|
31.8
|
|
|
99.1
|
|
|
(60.2
|
)
|
|||
Unrealized foreign exchange gain
|
|
(1.7
|
)
|
|
—
|
|
|
—
|
|
|||
Payment for long term maintenance
|
|
(49.8
|
)
|
|
(39.1
|
)
|
|
(26.5
|
)
|
|||
Deferred income tax (benefit) / expense
|
|
27.9
|
|
|
(8.6
|
)
|
|
(9.2
|
)
|
|||
West Aquarius
settlement
|
|
—
|
|
|
—
|
|
|
25.0
|
|
|||
Accretion of discount on deferred consideration
|
|
13.3
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
Changes in operating assets and liabilities, net of effect of acquisitions
|
|
|
|
|
|
|
||||||
Trade accounts receivable
|
|
49.8
|
|
|
(46.3
|
)
|
|
(9.4
|
)
|
|||
Prepaid expenses and accrued income
|
|
(1.9
|
)
|
|
—
|
|
|
—
|
|
|||
Trade accounts payable
|
|
15.3
|
|
|
(10.7
|
)
|
|
48.6
|
|
|||
Related party balances
|
|
(29.0
|
)
|
|
31.4
|
|
|
56.9
|
|
|||
Other assets
|
|
57.9
|
|
|
9.9
|
|
|
2.0
|
|
|||
Other liabilities
|
|
(45.0
|
)
|
|
41.7
|
|
|
(14.0
|
)
|
|||
Changes in deferred revenue
|
|
(12.0
|
)
|
|
(14.4
|
)
|
|
(12.9
|
)
|
|||
Other, net
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by operating activities
|
|
$
|
859.8
|
|
|
$
|
608.7
|
|
|
$
|
564.0
|
|
|
|
|
|
|
|
|
||||||
Cash Flows from Investing Activities
|
|
|
|
|
|
|
||||||
Additions to newbuildings and drilling units
|
|
(18.6
|
)
|
|
(31.6
|
)
|
|
(159.3
|
)
|
|||
Acquisition of subsidiaries, net of cash acquired
|
|
(214.7
|
)
|
|
(1,137.7
|
)
|
|
—
|
|
|||
Loan granted to related parties
|
|
(143.0
|
)
|
|
—
|
|
|
—
|
|
|||
Purchase of non-controlling interest in Seadrill Operating LP
|
|
—
|
|
|
(373.5
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
|
$
|
(376.3
|
)
|
|
$
|
(1,542.8
|
)
|
|
$
|
(159.3
|
)
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Cash Flows from Financing Activities
|
|
|
|
|
|
|
||||||
Net proceeds from long term debt
|
|
$
|
—
|
|
|
$
|
2,825.4
|
|
|
$
|
98.0
|
|
Repayments of long term debt
|
|
(97.6
|
)
|
|
(472.1
|
)
|
|
(348.8
|
)
|
|||
Debt fees paid
|
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|||
Net proceeds from related party debt
|
|
143.0
|
|
|
—
|
|
|
409.5
|
|
|||
Repayments of related party debt
|
|
(40.3
|
)
|
|
(1,588.3
|
)
|
|
|
|
|||
Proceeds from revolving credit facility
|
|
50.0
|
|
|
—
|
|
|
169.6
|
|
|||
Contingent consideration paid
|
|
(26.6
|
)
|
|
—
|
|
|
—
|
|
|||
Repayments of revolving credit facility
|
|
—
|
|
|
(125.9
|
)
|
|
(43.7
|
)
|
|||
Repayments of related party discount notes
|
|
—
|
|
|
(399.9
|
)
|
|
—
|
|
|||
Cash distributions
|
|
(435.3
|
)
|
|
(660.2
|
)
|
|
(140.9
|
)
|
|||
Proceeds on issuance of equity, net of fees
|
|
—
|
|
|
937.8
|
|
|
464.8
|
|
|||
Proceeds on issuance of equity to related parties
|
|
—
|
|
|
—
|
|
|
106.9
|
|
|||
Proceeds on issuance of units by Seadrill Capricorn Holdings LLC
|
|
—
|
|
|
570.3
|
|
|
—
|
|
|||
Distribution to Seadrill Limited for the acquisition of
T-15, T-16, West Leo
and
West
Sirius
(1)
|
|
—
|
|
|
—
|
|
|
(939.2
|
)
|
|||
Owner’s funding repaid
|
|
—
|
|
|
—
|
|
|
(112.4
|
)
|
|||
Net cash provided by/ (used in) financing activities
|
|
$
|
(407.6
|
)
|
|
$
|
1,087.1
|
|
|
$
|
(336.2
|
)
|
|
|
|
|
|
|
|
||||||
Effect of exchange rate changes on cash
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
Net increase in cash and cash equivalents
|
|
76.3
|
|
|
153.0
|
|
|
68.5
|
|
|||
Cash and cash equivalents at beginning of the year
|
|
242.7
|
|
|
89.7
|
|
|
21.2
|
|
|||
Cash and cash equivalents at the end of year
|
|
$
|
319.0
|
|
|
$
|
242.7
|
|
|
$
|
89.7
|
|
|
|
|
|
|
|
|
||||||
Supplementary disclosure of cash flow information
|
|
|
|
|
|
|
||||||
Interest paid net of capitalized interest
|
|
$
|
228.6
|
|
|
$
|
128.3
|
|
|
$
|
92.2
|
|
Taxes paid
|
|
57.0
|
|
|
42.6
|
|
|
35.1
|
|
|
|
Members’ Capital
|
|
|
|
|
|
|
||||||||||||||||
|
|
Common
Units
|
|
Subordinated
Units
|
|
Seadrill
Member
|
|
Total Before
Non-
Controlling
interest
|
|
Non-
controlling
Interest
|
|
Total
Equity
|
||||||||||||
Consolidated and Combined Balance at December 31, 2012
|
|
$
|
294.1
|
|
|
$
|
3.7
|
|
|
$
|
226.8
|
|
|
$
|
524.6
|
|
|
$
|
899.8
|
|
|
$
|
1,424.4
|
|
Movement in invested equity
|
|
—
|
|
|
—
|
|
|
(62.3
|
)
|
|
(62.3
|
)
|
|
(50.1
|
)
|
|
(112.4
|
)
|
||||||
Acquisition of dropdown companies from Seadrill
|
|
—
|
|
|
—
|
|
|
(831.5
|
)
|
|
(831.5
|
)
|
|
(962.5
|
)
|
|
(1,794.0
|
)
|
||||||
Deemed distribution to Seadrill for the acquisition of dropdown companies
|
|
—
|
|
|
—
|
|
|
609.7
|
|
|
609.7
|
|
|
696.9
|
|
|
1,306.6
|
|
||||||
Allocation of deemed distribution to Seadrill for the acquisition of dropdown companies
|
|
(609.7
|
)
|
|
—
|
|
|
—
|
|
|
(609.7
|
)
|
|
(696.9
|
)
|
|
(1,306.6
|
)
|
||||||
Equity contribution from Seadrill to Seadrill Operating LP
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
511.1
|
|
|
511.1
|
|
||||||
Units issued by Seadrill Capricorn Holdings LLC to Seadrill Limited
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
338.8
|
|
|
338.8
|
|
||||||
Common units issued to Seadrill for the acquisition of the T-16
|
|
106.9
|
|
|
—
|
|
|
—
|
|
|
106.9
|
|
|
—
|
|
|
106.9
|
|
||||||
Common units issued to Seadrill and public - (net of transaction costs of $15.3m)
|
|
464.8
|
|
|
—
|
|
|
—
|
|
|
464.8
|
|
|
—
|
|
|
464.8
|
|
||||||
Capital injection due to forgiveness of related party payables
|
|
9.9
|
|
|
6.6
|
|
|
—
|
|
|
16.5
|
|
|
24.0
|
|
|
40.5
|
|
||||||
Consolidated and Combined carve-out net income
|
|
53.4
|
|
|
33.7
|
|
|
57.3
|
|
|
144.4
|
|
|
271.0
|
|
|
415.4
|
|
||||||
Cash Distributions paid
|
|
(39.2
|
)
|
|
(25.2
|
)
|
|
—
|
|
|
(64.4
|
)
|
|
(76.5
|
)
|
|
(140.9
|
)
|
||||||
Consolidated Balance at December 31, 2013
|
|
$
|
280.2
|
|
|
$
|
18.8
|
|
|
$
|
—
|
|
|
$
|
299.0
|
|
|
$
|
955.6
|
|
|
$
|
1,254.6
|
|
Purchase of non-controlling interest
|
|
(279.6
|
)
|
|
—
|
|
|
—
|
|
|
(279.6
|
)
|
|
(93.2
|
)
|
|
(372.8
|
)
|
||||||
Common units issued to Seadrill and public (net of transaction costs)
|
|
937.8
|
|
|
—
|
|
|
—
|
|
|
937.8
|
|
|
—
|
|
|
937.8
|
|
||||||
Contribution from non-controlling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
570.3
|
|
|
570.3
|
|
||||||
Net income
|
|
102.2
|
|
|
26.8
|
|
|
9.2
|
|
|
138.2
|
|
|
176.4
|
|
|
314.6
|
|
||||||
Cash Distributions
|
|
(127.3
|
)
|
|
(33.9
|
)
|
|
(6.0
|
)
|
|
(167.2
|
)
|
|
(493.0
|
)
|
|
(660.2
|
)
|
||||||
Consolidated Balance at December 31, 2014
|
|
$
|
913.3
|
|
|
$
|
11.7
|
|
|
$
|
3.2
|
|
|
$
|
928.2
|
|
|
$
|
1,116.1
|
|
|
$
|
2,044.3
|
|
Net income
|
|
$
|
203.0
|
|
|
$
|
44.7
|
|
|
$
|
9.5
|
|
|
$
|
257.2
|
|
|
$
|
231.2
|
|
|
$
|
488.4
|
|
Cash Distributions
|
|
$
|
(170.8
|
)
|
|
$
|
(37.6
|
)
|
|
$
|
(12.7
|
)
|
|
$
|
(221.1
|
)
|
|
$
|
(214.2
|
)
|
|
$
|
(435.3
|
)
|
Consolidated balance at December 31, 2015
|
|
$
|
945.5
|
|
|
$
|
18.8
|
|
|
$
|
—
|
|
|
$
|
964.3
|
|
|
$
|
1,133.1
|
|
|
$
|
2,097.4
|
|
(In US$ millions)
|
June 19, 2015
|
|
Consideration
|
|
|
Cash
|
204.0
|
|
Contingent consideration
|
95.3
|
|
Seller's Credit
|
44.6
|
|
Plus: Working capital adjustment
|
30.7
|
|
Fair value of total consideration transferred
|
374.6
|
|
|
|
|
Recognized amounts of identifiable assets acquired and liabilities assumed at estimated fair value
|
|
|
Cash
|
20.0
|
|
Current assets
|
52.1
|
|
Intangible asset - favorable drilling contract
|
124.3
|
|
Drilling unit
|
575.3
|
|
Long term interest bearing debt
|
(336.0
|
)
|
Current liabilities
|
(20.2
|
)
|
Non-current liabilities
|
(1.3
|
)
|
Total identifiable net assets at acquisition
|
414.2
|
|
|
|
|
Measurement period adjustment
|
(30.3
|
)
|
Gain on bargain purchase
|
(9.3
|
)
|
Total
|
374.6
|
|
|
Year ended December 31,
|
||||||||||||||
(In US$ millions)
|
2015
|
|
2014
|
||||||||||||
|
Seadrill Partners LLC as reported
|
|
Supplemental pro forma combined entity
|
|
Seadrill Partners LLC as reported
|
|
Supplemental pro forma combined entity
|
||||||||
Total Revenue
|
$
|
1,741.6
|
|
|
$
|
1,851.3
|
|
|
$
|
1,342.6
|
|
|
$
|
1,564.1
|
|
Net Income
|
488.4
|
|
|
535.7
|
|
|
314.6
|
|
|
388.9
|
|
||||
Net income attributable to Seadrill Partners LLC members
|
257.2
|
|
|
284.6
|
|
|
138.2
|
|
|
181.3
|
|
(In US$ millions)
|
March 21, 2014
|
|
Consideration
|
|
|
Cash
|
696.9
|
|
Discount note issued
|
100.0
|
|
Working capital adjustment
|
(330.4
|
)
|
Fair value of total consideration transferred
|
466.5
|
|
|
|
|
Recognized amounts of identifiable assets acquired and liabilities assumed at estimated fair value
|
|
|
Cash
|
24.4
|
|
Current assets
|
44.4
|
|
Intangible asset - favorable drilling contract
|
76.2
|
|
Drilling unit
|
1,065.7
|
|
Non current assets
|
76.6
|
|
Long term interest bearing debt
|
(443.1
|
)
|
Current liabilities
|
(380.6
|
)
|
Total identifiable net assets
|
463.6
|
|
|
|
|
Goodwill
|
2.9
|
|
Total
|
466.5
|
|
|
Year ended December 31,
|
||||||||||
(In US$ millions)
|
2014
|
|
2013
|
||||||||
|
Seadrill Partners LLC as reported
|
|
Supplemental pro forma combined entity
|
|
Seadrill Partners LLC as reported
|
|
Supplemental pro forma combined entity
|
||||
Revenues
|
1,342.6
|
|
|
1,390.7
|
|
|
1,064.3
|
|
|
1,096.1
|
|
Net Income
|
314.6
|
|
|
331.0
|
|
|
415.4
|
|
|
412.5
|
|
(In US$ millions)
|
November 4, 2014
|
|
Consideration
|
|
|
Cash
|
467.0
|
|
Mobilization payable
|
73.7
|
|
Contingent consideration
|
65.7
|
|
Less: Working capital adjustment
|
(6.0
|
)
|
Fair value of total consideration transferred
|
600.4
|
|
|
|
|
Recognized amounts of identifiable assets acquired and liabilities assumed at estimated fair value
|
|
|
Cash
|
1.9
|
|
Current assets
|
61.4
|
|
Intangible asset - favorable drilling contract
|
204.7
|
|
Drilling unit
|
755.8
|
|
Non current assets
|
61.8
|
|
Long term interest bearing debt
|
(433.1
|
)
|
Current liabilities
|
(52.3
|
)
|
Total identifiable net assets
|
600.2
|
|
|
|
|
Goodwill
|
0.2
|
|
Total
|
600.4
|
|
|
Year ended December 31,
|
||||||||||
(In US$ millions)
|
2014
|
|
2013
|
||||||||
|
Seadrill Partners LLC as reported
|
|
Supplemental pro forma combined entity
|
|
Seadrill Partners LLC as reported
|
|
Supplemental pro forma combined entity
|
||||
Revenues
|
1,342.6
|
|
|
1,532.4
|
|
|
1,064.3
|
|
|
1,083.4
|
|
Net Income
|
314.6
|
|
|
407.6
|
|
|
415.4
|
|
|
403.8
|
|
(In US$ millions)
|
|
T-15
|
|
T-16
|
|
West Sirius
|
|
West Leo
|
|
Total
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Total purchase price
|
|
210.0
|
|
|
200.0
|
|
|
1,035.0
|
|
|
1,250.0
|
|
|
2,695.0
|
|
Debt assumed
|
|
(100.5
|
)
|
|
(93.1
|
)
|
|
(220.2
|
)
|
|
(485.0
|
)
|
|
(898.8
|
)
|
Purchase price less debt
|
|
109.5
|
|
|
106.9
|
|
|
814.8
|
|
|
765.0
|
|
|
1,796.2
|
|
Working capital adjustments
|
|
(34.9
|
)
|
|
(39.0
|
)
|
|
106.7
|
|
|
(35.0
|
)
|
|
(2.2
|
)
|
Adjusted purchase price
|
|
74.6
|
|
|
67.9
|
|
|
921.5
|
|
|
730.0
|
|
|
1,794.0
|
|
Carrying value of net assets / (liabilities) acquired
|
|
(4.8
|
)
|
|
0.3
|
|
|
374.6
|
|
|
117.3
|
|
|
487.4
|
|
Excess of sales price over net assets acquired
|
|
79.4
|
|
|
67.6
|
|
|
546.9
|
|
|
612.7
|
|
|
1,306.6
|
|
|
2015
|
|
2014
|
|
2013
|
|||
BP
|
44.8
|
%
|
|
41.5
|
%
|
|
35.0
|
%
|
ExxonMobil *
|
32.1
|
%
|
|
26.4
|
%
|
|
14.5
|
%
|
Tullow
|
13.5
|
%
|
|
17.4
|
%
|
|
18.8
|
%
|
Chevron
|
8.5
|
%
|
|
14.7
|
%
|
|
12.1
|
%
|
Total
|
—
|
%
|
|
—
|
%
|
|
19.6
|
%
|
Other
|
1.1
|
%
|
|
—
|
%
|
|
—
|
%
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
(In US$ millions)
|
2015
|
|
2014
|
|
2013
|
||||||
United States
|
$
|
781.1
|
|
|
$
|
556.6
|
|
|
$
|
370.4
|
|
Nigeria
|
250.1
|
|
|
228.5
|
|
|
213.3
|
|
|||
Ghana
|
234.7
|
|
|
233.5
|
|
|
198.6
|
|
|||
Canada
|
190.9
|
|
|
126.1
|
|
|
153.5
|
|
|||
Angola
|
179.4
|
|
|
92.3
|
|
|
87.9
|
|
|||
Thailand
|
99.8
|
|
|
105.6
|
|
|
40.6
|
|
|||
Other
|
5.6
|
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
1,741.6
|
|
|
$
|
1,342.6
|
|
|
$
|
1,064.3
|
|
(In US$ millions)
|
2015
|
|
2014
|
||||
United States
|
$
|
2,927.4
|
|
|
$
|
3,024.3
|
|
Ghana
|
591.5
|
|
|
608.4
|
|
||
Angola
|
571.3
|
|
|
182.5
|
|
||
Canada
|
519.2
|
|
|
539.3
|
|
||
Nigeria
|
508.0
|
|
|
525.4
|
|
||
Thailand
|
251.5
|
|
|
261.2
|
|
||
Myanmar
|
178.4
|
|
|
—
|
|
||
Total
|
$
|
5,547.3
|
|
|
$
|
5,141.1
|
|
(1)
|
The fixed assets referred to in the table above include the
eleven
drilling units at
December 31, 2015
and
ten
drilling units at
December 31, 2014
. Asset locations at the end of a period are not necessarily indicative of the geographic distribution of the revenues or operating profits generated by such assets during such period.
|
|
Year Ended December 31,
|
|||||||
(In US$ millions)
|
2015
|
|
2014
|
|
2013
|
|||
Current tax expense:
|
|
|
|
|
|
|||
United Kingdom
|
—
|
|
|
—
|
|
|
—
|
|
Foreign
|
72.6
|
|
|
43.5
|
|
|
42.4
|
|
Total current tax expense
|
72.6
|
|
|
43.5
|
|
|
42.4
|
|
Deferred tax (benefit) expense:
|
|
|
|
|
|
|||
United Kingdom
|
—
|
|
|
—
|
|
|
—
|
|
Foreign
|
28.0
|
|
|
(8.7
|
)
|
|
(9.2
|
)
|
Total income tax expense
|
100.6
|
|
|
34.8
|
|
|
33.2
|
|
|
2015
|
|
2014
|
|
2013
|
|||
U.K. statutory income tax rate
|
20.3
|
%
|
|
21.3
|
%
|
|
23.3
|
%
|
Non-U.K. taxes
|
(3.2
|
)%
|
|
(11.3
|
)%
|
|
(15.8
|
)%
|
Effective income tax rate
|
17.1
|
%
|
|
10.0
|
%
|
|
7.5
|
%
|
(In US$ millions)
|
2015
|
|
2014
|
||
Long-term deferred tax asset
|
34.2
|
|
|
18.4
|
|
Long-term deferred tax liability
|
(43.7
|
)
|
|
—
|
|
Net deferred tax (liability) / asset
|
(9.5
|
)
|
|
18.4
|
|
(In US$ millions)
|
2015
|
|
2014
|
|
2013
|
|||
Balance beginning of period
|
—
|
|
|
—
|
|
|
—
|
|
Increases as a result of positions taken in prior periods
|
—
|
|
|
—
|
|
|
—
|
|
Increases as a result of positions taken during the current period
|
9.0
|
|
|
—
|
|
|
—
|
|
Decreases as a result of positions taken in prior periods
|
—
|
|
|
—
|
|
|
—
|
|
Decreases as a result of positions taken in the current period
|
—
|
|
|
—
|
|
|
—
|
|
Balance end of period
|
9.0
|
|
|
—
|
|
|
—
|
|
|
Year Ended December 31,
|
|||||||
(In US$ millions)
|
2015
|
|
2014
|
|
2013
|
|||
Termination payments revenue
|
74.7
|
|
|
—
|
|
|
—
|
|
Related party other revenues
|
13.4
|
|
|
—
|
|
|
5.8
|
|
Total
|
88.1
|
|
|
—
|
|
|
5.8
|
|
(In US$ millions)
|
December 31,
2015 |
|
December 31,
2014 |
||
Reimbursable amounts due from customers
|
23.5
|
|
|
18.5
|
|
Mobilization revenue receivable - short-term
|
42.0
|
|
|
42.0
|
|
Favorable contracts to be amortized - short-term
|
70.5
|
|
|
40.5
|
|
Insurance receivable
|
12.1
|
|
|
14.9
|
|
Prepaid expenses
|
13.1
|
|
|
11.2
|
|
Other
|
5.4
|
|
|
2.2
|
|
Total other current assets
|
166.6
|
|
|
129.3
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||||||
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net carrying amount
|
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net carrying amount
|
||||||
Favorable contracts - intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
280.9
|
|
|
(14.8
|
)
|
|
266.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Additions *
|
76.4
|
|
|
—
|
|
|
76.4
|
|
|
280.9
|
|
|
—
|
|
|
280.9
|
|
Amortization of favorable contracts
|
—
|
|
|
(66.9
|
)
|
|
(66.9
|
)
|
|
—
|
|
|
(14.8
|
)
|
|
(14.8
|
)
|
Balance at end of period
|
357.3
|
|
|
(81.7
|
)
|
|
275.6
|
|
|
280.9
|
|
|
(14.8
|
)
|
|
266.1
|
|
|
Year ended December 31
|
||||||||||||||||
(In US$ millions)
|
2016
|
|
|
2017
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
Total
|
|
Amortization of favorable contracts
|
70.5
|
|
|
70.5
|
|
|
50.6
|
|
|
45.6
|
|
|
38.4
|
|
|
275.6
|
|
(In US$ millions)
|
December 31,
2015 |
|
December 31,
2014 |
||
Cost
|
6,434.2
|
|
|
5,790.5
|
|
Accumulated depreciation
|
(886.9
|
)
|
|
(649.4
|
)
|
Net book value
|
5,547.3
|
|
|
5,141.1
|
|
(In US$ millions)
|
December 31,
2015 |
|
December 31,
2014 |
||
Mobilization revenue receivable - long-term portion
|
109.2
|
|
|
150.6
|
|
Favorable contract – long-term portion
|
205.2
|
|
|
225.6
|
|
Total other non-current assets
|
314.4
|
|
|
376.2
|
|
(In US$ millions)
|
December 31, 2015
|
|
|
December 31, 2014
|
|
External debt agreements
|
|
|
|
||
Amended Senior Secured Credit Facilities
|
2,894.7
|
|
|
2,881.0
|
|
$1,450 Senior Secured Credit Facility
|
382.6
|
|
|
422.9
|
|
$420 West Polaris Facility
|
315.0
|
|
|
—
|
|
Sub-total external debt
|
3,592.3
|
|
|
3,303.9
|
|
Less current portion long term external debt
|
(105.3
|
)
|
|
(76.5
|
)
|
Long-term external debt
|
3,487.0
|
|
|
3,227.4
|
|
|
|
|
|
||
Related party debt agreements
|
|
|
|
||
Rig Financing and Loan Agreements
|
|
|
|
||
West Vencedor
Loan Agreement (previously $1,200 facility)
|
57.5
|
|
|
78.2
|
|
$440 Rig Financing Agreement
|
139.0
|
|
|
158.8
|
|
Sub-total Rig Financing Agreements
|
196.5
|
|
|
237.0
|
|
|
|
|
|
||
Other related party debt
|
|
|
|
||
$109.5 T-15 vendor financing facility
|
109.5
|
|
|
109.5
|
|
Total related party debt
|
306.0
|
|
|
346.5
|
|
Less current portion of related party debt
|
(145.8
|
)
|
|
(40.4
|
)
|
Long-term related party debt and related party loan notes
|
160.2
|
|
|
306.1
|
|
|
|
|
|
||
Total external and related party debt
|
3,898.3
|
|
|
3,650.4
|
|
|
|
Outstanding debt as of December 31, 2015
|
||||||||
(In $ millions)
|
|
Principal outstanding
|
|
Debt Issuance Costs
|
|
Total Debt
|
|
|||
Current portion of long-term external debt
|
|
$
|
105.3
|
|
$
|
(11.5
|
)
|
$
|
93.8
|
|
Long-term external debt
|
|
3,487.0
|
|
(46.6
|
)
|
3,440.4
|
|
|||
Total external debt
|
|
$
|
3,592.3
|
|
$
|
(58.1
|
)
|
$
|
3,534.2
|
|
|
|
Outstanding debt as of December 31, 2014
|
||||||||
(In $ millions)
|
|
Principal outstanding
|
|
Debt Issuance Costs
|
|
Total Debt
|
|
|||
Current portion of long-term external debt
|
|
$
|
76.5
|
|
$
|
(7.6
|
)
|
$
|
68.9
|
|
Long-term external debt
|
|
3,227.4
|
|
(70.8
|
)
|
3,156.6
|
|
|||
Total external debt
|
|
$
|
3,303.9
|
|
$
|
(78.4
|
)
|
$
|
3,225.5
|
|
•
|
Limitations on the incurrence of indebtedness and issuance of preferred equity;
|
•
|
Limitations on the incurrence of liens;
|
•
|
Limitations on dividends and other restricted payments;
|
•
|
Limitations on investments;
|
•
|
Limitations on mergers, consolidation and sales of all or substantially all assets;
|
•
|
Limitations on asset sales;
|
•
|
Limitations on transactions with affiliates;
|
•
|
Limitation on business activities to businesses similar to those now being conducted; and
|
•
|
Requirement to maintain a senior secured net leverage ratio of no more than
5.5
to
1.0
(
5.0
to
1.0
for the fiscal quarter ending March 31, 2015 and thereafter).
|
•
|
Failure of any borrow of the term loan to pay principal, interest or other amounts owing with respect to the loans under the Amended Senior Secured Credit Facilities;
|
•
|
Breach in any material respect of any representation or warranty contained in Amended Senior Secured Credit Facilities documentation;
|
•
|
Breach of any covenant contained in Amended Senior Secured Credit Facilities documentation;
|
•
|
The occurrence of a payment default under, or acceleration of, any indebtedness aggregating
$25 million
or more other than the term loan;
|
•
|
Failure by our subsidiaries that are borrowers or guarantors of our Amended Senior Secured Credit Facilities to pay or stay any judgment in excess of
$25 million
;
|
•
|
Repudiation by our subsidiaries that are borrowers or guarantors of our Amended Senior Secured Credit Facilities of any guarantee or collateral documents related to the Amended Senior Secured Credit Facilities;
|
•
|
Any guarantee related to the Amended Senior Secured Credit Facilities is found to be unenforceable or invalid or is not otherwise effective;
|
•
|
Any of our subsidiaries that are borrowers or guarantors of our Amended Senior Secured Credit Facilities file for bankruptcy or become the subject of an involuntary bankruptcy case or other similar proceeding;
|
•
|
The equity interests of any of the company, Seadrill Operating LP or Seadrill Capricorn Holdings LLC is pledged to anyone other than the collateral agent for the term loan; and
|
•
|
The occurrence of a change of control.
|
•
|
sell the applicable drilling unit;
|
•
|
incur additional indebtedness or guarantee other indebtedness;
|
•
|
make investments or acquisitions;
|
•
|
pay dividends or make any other distributions if an event of default occurs; or
|
•
|
enter into inter-company charter arrangements for the drilling units not contemplated by the applicable Rig Facility.
|
•
|
Aggregated minimum liquidity requirement for Seadrill's consolidated group: to maintain cash and cash equivalents of at least
$150 million
within the group.
|
•
|
Interest coverage ratio: to maintain an EBITDA to interest expense ratio of at least
2.5
:1.
|
•
|
Current ratio: to maintain current assets to current liabilities ratio of at least
1
:1. Current assets are defined as book value less minimum liquidity, but including up to
20.0%
of shares in listed companies owned
20.0%
or more. Current liabilities are defined as book value less the current portion of long term debt.
|
•
|
Equity to asset ratio: to maintain total equity to total assets ratio of at least
30.0%
. Both equity and total assets are adjusted for the difference between book and market values of drilling units.
|
•
|
Leverage ratio: to maintain a ratio of net debt to EBITDA no greater than
4.5
:1, up to the effective date of the amended covenants discussed further below. Net debt is calculated as all interest bearing debt less cash and cash equivalents excluding minimum liquidity requirements.
|
•
|
6.0
:1, from and including the financial quarter starting on July 1, 2015 and including the financial quarter ending on September 30, 2016;
|
•
|
5.5
:1, from and including the financial quarter starting on October 1, 2016 and including the financial quarter ending December 31, 2016;
|
•
|
4.5
:1, from and including the financial quarter starting on January 1, 2017 until the final maturity date.
|
•
|
.
125 percent
per annum if the leverage ratio is
4.50
:1 up to and including
4.99
:1;
|
•
|
.25 percent
per annum if the leverage ratio is
5.00
:1 up to and including
5.49
:1;
|
•
|
.75 percent
per annum if the leverage ratio is
5.50
:1 up to and including
6.00
:1
|
•
|
total loss or sale of a drilling unit securing a Rig Financing Agreements;
|
•
|
cancellation or termination of any existing charter contract or satisfactory drilling contract; and
|
•
|
a change of control.
|
•
|
failure to comply with the financial or insurance covenants;
|
•
|
cross-default to other indebtedness held by both Seadrill and its subsidiaries and by the Company;
|
•
|
failure by Seadrill or by the Company to remain listed on a stock exchange;
|
•
|
the occurrence of a material adverse change;
|
•
|
revocation, termination, or modification of any authorization, license, consent, permission, or approval as necessary to conduct operations as contemplated by the applicable Rig Financing Agreement ; and
|
•
|
the destruction, abandonment, seizure, appropriation or forfeiture of property of the guarantors or Seadrill and its subsidiaries, or the limitation by seizure, expropriation, nationalization, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority, of the authority or ability of Seadrill or any subsidiary thereof to conduct its business, which has or reasonably may be expected to have a material adverse effect.
|
•
|
guarantees from rig owning subsidiaries (guarantors),
|
•
|
a first priority share pledge over all the shares issued by each of the guarantors,
|
•
|
a first priority perfected mortgage in all collateral rigs and any deed of covenant thereto, subject to contractual agreed "quiet enjoyment" undertakings with the end-user of the collateral rigs to be entered into if this is required by the relevant end-user pursuant to the relevant contract,
|
•
|
a first priority security interest over each of the rig owners' with respect to all earnings and proceeds of insurance, and
|
•
|
a first priority security interest in the earnings accounts.
|
•
|
Key amendments and waivers:
|
◦
|
Equity ratio
: Seadrill is required to maintain a total equity to total assets ratio of at least
30.0%
. Prior to the amendment, both total equity and total assets were adjusted for the difference between book and market values of drilling units, as determined by independent broker valuations. The amendment removes the need for the market value adjustment from the calculation of the equity ratio until June 30, 2017.
|
•
|
Leverage ratio
: Seadrill is required to maintain a ratio of net debt to EBITDA. Prior to the amendment the leverage ratio had to be no greater than
6.0
:1, falling to
5.5
:1 from October 1, 2016, and falling again to
4.5
:1 from January 1, 2017. The amendment retains the ratio at
6.0
:1 until December 31, 2016, and then increases to
6.5
:1 between January 1, 2017 and June 30, 2017.
|
•
|
Minimum-value-clauses
: Seadrill’s secured bank credit facilities contain loan-to-value clauses, or minimum-value-clauses (“MVC”), which could require Seadrill to post additional collateral or prepay a portion of the outstanding borrowings should the value of the drilling units securing borrowings under each of such agreements decrease below required levels. Subject to compliance with the terms of the amendment, this covenant has been suspended until June 30, 2017.
|
•
|
Minimum Liquidity
: Seadrill has previously been required to maintain a minimum of
$150 million
of liquidity. This has been reset to
$250 million
until June 30, 2017.
|
•
|
Additional undertakings:
|
◦
|
Further process
: Seadrill has agreed to consultation, information provision and certain processes in respect of further discussions with its lenders under its senior secured credit facilities, including agreements in respect of progress milestones towards the agreement of, and implementation plan in respect of, a comprehensive financing package.
|
◦
|
Restrictive undertakings
: Seadrill has agreed to additional near-term restrictive undertakings applicable during this process, applicable to Seadrill and its subsidiaries, including (without limitation) limitations in respect of:
|
▪
|
incurrence and maintenance of certain indebtedness
|
▪
|
dividends, share capital repurchases and total return swaps;
|
▪
|
investments in, extensions of credit to or the provision of financial support for non-wholly owned subsidiaries;
|
▪
|
investments in, extensions of credit to or the provision of financial support for joint ventures or associated entities;
|
▪
|
acquisitions;
|
▪
|
dispositions;
|
▪
|
prepayment, repayment or repurchase of any debt obligations;
|
▪
|
granting security; and
|
▪
|
payments in respect of newbuild drilling units,
|
•
|
Other changes and provisions:
|
◦
|
Undrawn availability
: Seadrill has agreed it will not borrow any undrawn commitments under its senior secured credit facilities unless the coordinating committee of lenders has been provided
15
days notice of such borrowing.
|
◦
|
Fees
: Seadrill has agreed to pay certain fees to its lenders in consideration of these extensions and amendments.
|
•
|
notify Seadrill of the occurrence of any default or event of default; and
|
•
|
provide Seadrill with information in respect of its business and financial status as Seadrill may reasonably require, including, but not limited to, copies of the Company's unaudited quarterly financial statements and its audited annual financial statements.
|
•
|
failure to pay any sum payable under the revolving credit facility when due;
|
•
|
breach of certain covenants and obligations of the revolving credit facility;
|
•
|
a material inaccuracy of any representation or warranty;
|
•
|
default under other indebtedness in excess of
$25.0 million
;
|
•
|
bankruptcy or insolvency events; and
|
•
|
commencement of proceedings seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of the Company’s assets that results in an entry of an order for any such relief that is not vacated, discharged, stayed or bonded pending appeal within
sixty days
of the entry thereof.
|
(In US$ millions)
|
December 31, 2015
|
|
|
December 31, 2014
|
|
Taxes payable
|
28.4
|
|
|
12.1
|
|
Employee and business withheld taxes, social security and vacation payment
|
15.4
|
|
|
19.5
|
|
VAT payable
|
4.0
|
|
|
6.1
|
|
Deferred mobilization/demobilization revenues short-term
|
18.0
|
|
|
15.9
|
|
Unrealized loss on derivatives
|
84.2
|
|
|
56.1
|
|
Accrued expenses and other current liabilities
|
67.9
|
|
|
117.7
|
|
Total other current liabilities
|
217.9
|
|
|
227.4
|
|
(In US$ millions)
|
|
2015
|
|
2014
|
|
2013
|
|||
Management and administrative fees (a) and (b)
|
|
75.3
|
|
|
58.6
|
|
|
47.1
|
|
Rig operating costs (c)
|
|
29.3
|
|
|
22.4
|
|
|
16.5
|
|
Insurance premiums (d)
|
|
20.2
|
|
|
21.8
|
|
|
21.8
|
|
Interest expense (e)
|
|
13.7
|
|
|
87.7
|
|
|
87.7
|
|
Commitment fee (f)
|
|
2.0
|
|
|
2.2
|
|
|
4.5
|
|
Derivative (gains) / losses (o)
|
|
10.2
|
|
|
41.6
|
|
|
(49.9
|
)
|
Bareboat charters (h)
|
|
(1.6
|
)
|
|
(25.8
|
)
|
|
(4.9
|
)
|
Other revenues - operating expenses recharged to Seadrill (i)
|
|
(13.4
|
)
|
|
—
|
|
|
(5.8
|
)
|
Operating expenses related to operations recharged to Seadrill (i)
|
|
12.8
|
|
|
—
|
|
|
5.5
|
|
Accretion of discount on deferred consideration (j)
|
|
13.3
|
|
|
—
|
|
|
—
|
|
Total
|
|
161.8
|
|
|
158.1
|
|
|
122.5
|
|
(In US$ millions)
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
Trading balances due from Seadrill and subsidiaries (k)
|
|
175.9
|
|
|
56.7
|
|
Trading balances due to Seadrill and subsidiaries (k)
|
|
(354.7
|
)
|
|
(250.0
|
)
|
Revolving credit facility with Seadrill (f)
|
|
—
|
|
|
—
|
|
$440 Million Rig Financing Agreement with Seadrill (T-15 and T-16) (g)
|
|
(139.0
|
)
|
|
(158.8
|
)
|
West Vencedor Loan Agreement with Seadrill (West Vencedor) (g)
|
|
(57.5
|
)
|
|
(78.2
|
)
|
Vendor financing loan agreement with Seadrill (l)
|
|
(109.5
|
)
|
|
(109.5
|
)
|
Discount notes with Seadrill (m)
|
|
—
|
|
|
—
|
|
Deferred and contingent consideration to related party - short term portion (j)
|
|
(60.4
|
)
|
|
(25.8
|
)
|
Deferred and contingent consideration to related party - long term portion (j)
|
|
(185.4
|
)
|
|
(111.2
|
)
|
Derivatives with Seadrill - interest rate swaps (n)
|
|
2.2
|
|
|
6.0
|
|
(a)
|
Management and administrative services agreements –
In connection with the IPO, OPCO entered into a management and administrative services agreement with Seadrill Management a wholly owned subsidiary of Seadrill, pursuant to which Seadrill Management provides the Company certain management and administrative services. The services provided by Seadrill Management are charged at cost plus management fee equal to
5%
of Seadrill Management’s costs and expenses incurred in connection with providing these services. The agreement has an initial term for
5 years
and can be terminated by providing
90 days
written notice.
|
(b)
|
Technical and administrative service agreement –
In connection with the IPO, OPCO entered into certain advisory, technical and/or administrative services agreements with subsidiaries of Seadrill. The services provided by Seadrill’s subsidiaries are charged at cost plus service fee equal to approximately
5%
of Seadrill’s costs and expenses incurred in connection with providing these services.
|
(c)
|
Rig operating costs
– relates to rig operating costs recharged by Seadrill in relation to costs incurred on behalf of the
West Polaris
and the
West Vencedor
operating in Angola. These costs are recharged by Seadrill at a markup of
5%
.
|
(d)
|
Insurance premiums
– the Company’s drilling units are insured by a Seadrill company and the insurance premiums incurred are recharged to the Company.
|
(e)
|
Interest expense –
consists of interest expense incurred on the $440 Million Rig Financing Agreement, West Vencedor Loan Agreement, discount notes and the
$109.5 million
T-15
Vendor Financing Loan. Prior to entering these agreements, these costs were allocated to the Company from Seadrill based on the Company’s debt as a percentage of Seadrill’s overall debt. Upon entering these agreements, the costs and expenses have been incurred by the Company.
|
(f)
|
$100 million
revolving credit facility
– In October 2012 the Company entered into a
$300 million
revolving credit facility with Seadrill. The facility is for a term of
five
years and bears interest at a rate of LIBOR plus
5%
per annum, with an annual
2%
commitment fee on the undrawn balance. On March 1, 2014, the revolving credit facility was amended to reduce the maximum borrowing limit from
$300 million
to
$100 million
. During
2015
the Company drew down
nothing
from the revolving credit facility and repaid
nothing
. As at
December 31, 2015
and
2014
, the outstanding balance was
nil
and
nil
, respectively.
|
(g)
|
Rig Financing Agreements
and
Loan Agreements
– See
Note 11
- Debt for details of the $440 Million Rig Financing Agreement and West Vencedor Loan Agreement. Under the agreements each rig owning subsidiary makes payments of principal and interest directly to the lenders under each Rig Financing Agreement, at Seadrill’s direction and on its behalf, corresponding to payments of principal and interest due under each Rig Financing Agreement that are allocable to each rig.
|
(h)
|
Bareboat charters
– In connection with the transfer of the
West Aquarius
operations to Canada, the
West Aquarius
drilling contract was assigned to Seadrill Canada Ltd., a wholly owned subsidiary of OPCO, necessitating certain changes to the related party contractual arrangements relating to the
West Aquarius
. Seadrill China Operations Ltd, the owner of the
West Aquarius
and a wholly-owned subsidiary
|
(i)
|
Other revenues and expenses
- The Company incurs certain operating costs on behalf of Seadrill drilling units and recharges them at a markup of
5%
. During the year ended
December 31, 2015
the Company earned
$13.4 million
in other revenues within our Nigerian service company from Seadrill for certain services, including the provision of onshore and offshore personnel, which the Company provided to Seadrill’s
West Jupiter
and
West Saturn
drilling rigs. Operating expenses relating to these related party revenues were
$12.8 million
in the year ended
December 31, 2015
.
|
(j)
|
Deferred consideration to related party
- On the acquisition of the
West Polaris
in 2015 the Company recognized a seller's credit balance payable of
$44.6 million
, a long term deferred consideration balance of
$63.7 million
and a short-term deferred consideration balance of
$31.6 million
.
|
(k)
|
Trading balances –
Receivables and payables with Seadrill and its subsidiaries are comprised primarily of unpaid management fees, advisory and administrative services, as well as, accrued interest. In addition, certain receivables and payables arise when the Company pays an invoice on behalf of a related party and vice versa. Receivables and payables are generally settled quarterly in arrears. Trading balances to Seadrill and its subsidiaries are unsecured, generally bear interest at a rate equal to
LIBOR
plus approximately
4%
per annum, and are intended to be settled in the ordinary course of business.
|
(l)
|
$109.5 million
Vendor financing loan
- On May 17, 2013, Seadrill Operating LP borrowed from Seadrill
$109.5 million
as vendor financing to fund the acquisition of the
T-15
. The loan bears interest at a rate of
LIBOR
plus a margin of
5%
and matures in May 2016.
|
(m)
|
Discount loan notes:
|
•
|
$229.9 million
discount note -
On December 13, 2013, as part of the acquisition of the
West Sirius
, Seadrill Capricorn Holdings issued a zero coupon discount note from Seadrill for
$229.9 million
. The note was repayable in June 2015 and upon maturity, the Company was due to pay
$238.5 million
to Seadrill. This note was repaid in full in February 2014 with proceeds from the Senior Secured Credit Facilities.
|
•
|
$70.0 million
discount note -
On December 13, 2013, as part of the acquisition of the
West Sirius
, the Company issued a
zero
coupon discount note from Seadrill for
$70.0 million
. The note was repayable in June 2015 and upon maturity, the Company was due to pay
$72.6 million
to Seadrill.This note was repaid in full in February 2014 with proceeds from the Senior Secured Credit Facilities.
|
•
|
$100.0 million
discount note
-
On March 21, 2014, as part of the acquisition of the
West Auriga
, Seadrill Capricorn Holdings issued a zero coupon discount note to Seadrill in an initial amount of
$100.0 million
. The note was repayable in September 2015 and upon maturity, the Company was due to pay
$103.7 million
to Seadrill. This note was repaid in June 2014 with proceeds from the Senior Secured Credit Facilities.
|
(o)
|
Derivatives with Seadrill - Interest rate swaps -
As of
December 31, 2015
, the Company was party to interest rate swap agreements with Seadrill for a combined outstanding principal amount of approximately
$655.3 million
at rates between
1.10%
per annum and
1.93%
per annum. The swap agreements mature between
July 2018
and
December 2020
. The net
loss
recognized on the Company’s interest rate swaps for the year ended
December 31, 2015
, was
$10.2 million
(year ended
December 31, 2014
:
loss
of
$41.6 million
). Refer to Note 14 for further information.
|
Outstanding principal as at December 31, 2015
|
|
Receive rate
|
Pay rate
|
Expiry of contract
|
|
(In US$ millions)
|
|
|
|
|
|
416.3
|
|
(1), (2)
|
3 month LIBOR
|
1.10%
|
July 2, 2018
|
100.0
|
|
(2)
|
3 month LIBOR
|
1.36%
|
October 29, 2019
|
70.4
|
|
(1), (2)
|
3 month LIBOR
|
1.11%
|
June 19, 2020
|
68.6
|
|
(1), (2)
|
3 month LIBOR
|
1.93%
|
December 21, 2020
|
2,851.9
|
|
(1)
|
3 month LIBOR
|
2.45% to 2.52%
|
February 21, 2021
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||
(In US$ millions)
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
||||
Cash and cash equivalents
|
319.0
|
|
|
319.0
|
|
|
242.7
|
|
|
242.7
|
|
Current portion of long-term debt
|
88.0
|
|
|
105.3
|
|
|
68.3
|
|
|
76.5
|
|
Current portion of long-term debt to related party
|
145.8
|
|
|
145.8
|
|
|
40.4
|
|
|
40.4
|
|
Long-term debt
|
1,763.5
|
|
|
3,487.0
|
|
|
2,574.8
|
|
|
3,227.4
|
|
Long-term portion of debt to related party
|
160.2
|
|
|
160.2
|
|
|
306.1
|
|
|
306.1
|
|
Related party deferred and contingent consideration
|
245.8
|
|
|
245.8
|
|
|
137.0
|
|
|
137.0
|
|
|
|
Fair value measurements
at reporting date using
|
||||||
|
Total fair value as at December 31, 2015
|
Quoted Prices
in Active
Markets for
Identical Assets
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||
(In US$ millions)
|
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||
Current assets:
|
|
|
|
|
||||
Derivative instruments - Interest rate swap contracts (related party)
|
2.2
|
|
—
|
|
2.2
|
|
—
|
|
Total assets
|
2.2
|
|
—
|
|
2.2
|
|
—
|
|
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Derivative instruments - Interest rate swap contracts
|
(84.2
|
)
|
—
|
|
(84.2
|
)
|
—
|
|
Total liabilities
|
(84.2
|
)
|
—
|
|
(84.2
|
)
|
—
|
|
|
|
Fair value measurements
at reporting date using
|
||||||
|
Total fair value as at December 31, 2014
|
Quoted Prices
in Active
Markets for
Identical Assets
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||
(In US$ millions)
|
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||
Current assets:
|
|
|
|
|
||||
Derivative instruments - Interest rate swap contracts (related party)
|
6.0
|
|
—
|
|
6.0
|
|
—
|
|
Total assets
|
6.0
|
|
—
|
|
6.0
|
|
—
|
|
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Derivative instruments - Interest rate swap contracts (related party)
|
(56.1
|
)
|
—
|
|
(56.1
|
)
|
—
|
|
Total liabilities
|
(56.1
|
)
|
—
|
|
(56.1
|
)
|
—
|
|
|
2015
|
|
2014
|
|
2013
|
|||
BP
|
44.8
|
%
|
|
41.5
|
%
|
|
35.0
|
%
|
ExxonMobil *
|
32.1
|
%
|
|
26.4
|
%
|
|
14.5
|
%
|
Tullow
|
13.5
|
%
|
|
17.4
|
%
|
|
18.8
|
%
|
Chevron
|
8.5
|
%
|
|
14.7
|
%
|
|
12.1
|
%
|
Total
|
—
|
%
|
|
—
|
%
|
|
19.6
|
%
|
Other
|
1.1
|
%
|
|
—
|
%
|
|
—
|
%
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
Year ended December 31,
|
||||||||||
(in US $ millions, except per unit data)
|
2015
|
|
2014
|
|
2013
|
||||||
Net income attributable to:
|
|
|
|
|
|
||||||
Common unitholders
|
$
|
184.1
|
|
|
$
|
109.2
|
|
|
$
|
56.4
|
|
Subordinated unitholders
|
40.5
|
|
|
29.0
|
|
|
30.2
|
|
|||
Seadrill member interest
(1)
|
32.6
|
|
|
—
|
|
|
57.8
|
|
|||
Net income attributable to Seadrill Partners LLC owners
|
$
|
257.2
|
|
|
$
|
138.2
|
|
|
$
|
144.4
|
|
|
|
|
|
|
|
||||||
Weighted average units outstanding (basic and diluted) (in thousands):
|
|
|
|
|
|
||||||
Common unitholders
|
75,278
|
|
|
62,374
|
|
|
26,266
|
|
|||
Subordinated unitholders
|
16,543
|
|
|
16,543
|
|
|
16,543
|
|
|||
|
|
|
|
|
|
||||||
Earnings per unit (basic and diluted):
|
|
|
|
|
|
||||||
Common unitholders
|
$
|
2.45
|
|
|
$
|
1.75
|
|
|
$
|
2.15
|
|
Subordinated unitholders
|
$
|
2.45
|
|
|
$
|
1.75
|
|
|
$
|
1.83
|
|
|
|
|
|
|
|
||||||
Cash distributions declared and paid in the period per unit
(2)
|
$
|
1.7025
|
|
|
$
|
1.6025
|
|
|
$
|
1.2325
|
|
|
|
|
|
|
|
||||||
Subsequent event: Cash distributions declared and paid relating to the period per unit
(3)
:
|
$
|
0.2500
|
|
|
$
|
0.5675
|
|
|
$
|
0.4450
|
|
(1)
|
Pre-acquisition net income from entities acquired from Seadrill in common control transactions during
2013
(See Note 3), has been allocated to the Seadrill member interest. The Seadrill member interest, and its rights to the incentive distribution rights, is owned by the predecessor owner of acquired entities, Seadrill Limited. Included within the amount allocated to the Seadrill member interest in
2013
is
$0.5 million
allocated to the incentive distribution rights.
|
(2)
|
Refers to the cash distributions relating to the period declared and paid during the year.
|
(3)
|
Refers to the cash distribution relating to the period, declared and paid subsequent to the year-end.
|
•
|
First, to the common unitholders, pro-rata, until the Company distributes for each outstanding common unit an amount equal to the minimum quarterly distribution for that quarter;
|
•
|
Second, to the common unitholders, pro-rata, until the Company distributes for each outstanding common an amount equal to any arrearages in payment of the minimum quarterly distribution on the common units for prior quarters during the subordination period; and
|
•
|
Third, to the subordinated units, pro-rata, the Company distributes for each subordinated unit an amount equal to the minimum quarterly distribution for that quarter;
|
•
|
The Company has distributed available cash from operating surplus to the common and subordinated unitholders in an amount equal to the minimum quarterly distribution; and
|
•
|
The Company has distributed available cash from operating surplus on outstanding common units in an amount necessary to eliminate any cumulative arrearages in payment of the minimum quarterly distribution;
|
•
|
first,
100.0%
to all unitholders, until each unitholder receives a total of
$0.4456
per unit for that quarter (the “first target distribution”);
|
•
|
second,
85%
to all unitholders, pro rata, and
15.0%
to the holders of the incentive distribution rights, pro rata, until each unitholder receives a total of
$0.4844
per unit for that quarter (the “second target distribution”);
|
•
|
third,
75.0%
to all unitholders, pro rata, and
25.0%
to the holders of the incentive distribution rights, pro rata, until each unitholder receives a total of
$0.5813
per unit for that quarter (the “third target distribution”); and
|
•
|
thereafter,
50.0%
to all unitholders, and
50.0%
to the holders of the incentive distribution rights, pro rata.
|
•
|
distributions of available cash from operating surplus on each of the outstanding common units and subordinated units equaled or exceeded the minimum quarterly distribution for each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date;
|
•
|
the “adjusted operating surplus” (as defined in the partnership agreement) generated during each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date equaled or exceeded the sum of the minimum quarterly distributions on all of the outstanding common units and subordinated units during those periods on a fully diluted weighted average basis during those periods; and
|
•
|
there are no outstanding arrearages in payment of the minimum quarterly distribution on the common units.
|
|
Year ended December 31,
|
|||||||
(in US $ millions)
|
2015
|
|
2014
|
|
2013
|
|||
Distributions paid to incentive distribution rights holders
|
9.5
|
|
|
9.2
|
|
|
—
|
|
(In US$ millions)
|
2015
|
|
2014
|
|
2013
|
|||
Purchase of
West Auriga
, issuance of loan note to related party (1)
|
—
|
|
|
100.0
|
|
|
—
|
|
Purchase of
West Vela
, deferred consideration payable to related party (2)
|
—
|
|
|
73.7
|
|
|
—
|
|
Purchase of
West Vela
, contingent consideration payable to related party (2)
|
—
|
|
|
65.7
|
|
|
—
|
|
Purchase of the
West Polaris
, deferred consideration payable to related party (3)(4)
|
65.0
|
|
|
—
|
|
|
—
|
|
Purchase of the
West Polaris
, seller's credit payable to related party (3)
|
44.6
|
|
|
—
|
|
|
—
|
|
Capital injection due to forgiveness of related party payables
|
—
|
|
|
—
|
|
|
40.5
|
|
1.
|
The purchase of the
West Auriga
was financed by the issuance of a discount loan note: refer to
Note 3
- Business acquisitions
|
2.
|
The purchase of the
West Vela
was financed partly by deferred and contingent consideration: refer to
Note 3
- Business acquisitions
|
3.
|
The purchase of the
West Polaris
was financed party by a seller's credit and deferred consideration: refer to
Note 3
- Business acquisitions.
|
4.
|
The contingent consideration payable to Seadrill was reduced by a measurement period adjustment in the year ended
December 31, 2015
. Refer to
Note 3
- Business acquisitions.
|
|
|
SEADRILL PARTNERS LLC
(Registrant)
|
|
|
|
|
|
Date: April 28, 2016
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Mark Morris
|
|
|
Name:
|
Mark Morris
|
|
|
Title:
|
Chief Executive Officer of Seadrill Partners LLC
(Principal Executive Officer of Seadrill Partners LLC)
|
(1)
|
SEADRILL MANAGEMENT AS,
a company incorporated in Norway and having an office at Løkkeveien 111, 4007 Stavanger, Norway (the “
Transferor
”);
|
(2)
|
SEADRILL MANAGEMENT LTD
, a company registered and incorporated in England and Wales with company number 08276358 and having its registered office at 2nd Floor Building 11, Chiswick Business Park 566 Chiswick High Road, London, W4 5YS (the “
Transferee
”); and
|
(3)
|
SEADRILL PARTNERS LLC
, a company incorporated in the Marshall Islands and having an office at 2nd Floor, Building 11, Chiswick Business Park, 566 Chiswick High Road, London W4 5YS, UK (the “
Remaining Party
”)
|
(A)
|
The Transferor and the Remaining Party entered into a contract for the provision of management and administrative services dated 24 October 2012 (the “
Management
Agreement
”).
|
(B)
|
The Transferor wishes to be released and discharged from and the Transferee has agreed to perform and assume the obligations and liabilities under the Management Agreement.
|
(C)
|
The Transferee and the Remaining Party wish to amend certain terms of the Management Agreement, as detailed herein, to account for an alteration in the services to be provided.
|
1.
|
Definitions and Interpretation
|
1.1
|
Except where the context otherwise indicates or requires, the following terms in this Novation Agreement shall have the following meanings:
|
1.1.1
|
“
Paragraph
” means a paragraph in this Novation Agreement;
|
1.1.2
|
“
Transfer Date
” means 1 April 2013; and
|
1.1.3
|
“
Transferred Interest
” means the Transferor’s undivided legal and beneficial interest in and under the Management Agreement, together with all rights, title, obligations, liabilities and interests attaching thereto.
|
1.2
|
In relation to the interpretation of this Novation Agreement:
|
1.2.1
|
unless the context otherwise requires, the singular shall be deemed to include the plural and vice versa;
|
1.2.2
|
the words and phrases “other”, “including” and “in particular” shall not limit the generality of the preceding words or be construed as being limited to the same class as the preceding words where a wider construction is possible; and
|
1.2.3
|
reference to any law, statute or other legislative or regulatory order is to the same as amended, modified or replaced from time to time and to any regulation, rule, delegated legislation or order made thereunder.
|
2.
|
Novation of Management Agreement
|
2.1
|
The Parties agree that, in consideration of the assumption by the Transferee of the Transferred Interest, with effect on and from the Transfer Date, in respect of the Management Agreement:
|
2.1.4
|
the Transferor shall cease to be a party to the Management Agreement in respect of the Transferred Interest and the Transferee shall become a party to the Management Agreement in respect of the Transferred Interest and shall assume the liabilities, perform the obligations and be entitled to the rights and benefits therein in place of the Transferor in respect of the Transferred Interest;
|
2.1.5
|
the Transferee undertakes and covenants as a separate obligation with the Transferor and the Remaining Party to assume, observe, perform, discharge and be bound by all liabilities and obligations in respect of the Transferred Interest and shall assume the liabilities, perform the obligations and be entitled to the rights and benefits therein in place of the Transferor in respect of the Transferred Interest; and
|
2.1.6
|
the Remaining Party and the Transferee shall each release and discharge the Transferor from the observance, performance and discharge of each of the liabilities and obligations assumed by the Transferee in respect of the Transferred Interest pursuant to this Paragraph 2.1 and shall accept the like observance, performance and discharge of those liabilities and obligations of the Transferee in place thereof provided that (without prejudice to the effect of the arrangements in respect of the Transferred Interest) the Transferor shall not be so released and shall retain all such liabilities in cases of its wilful misconduct or fraud or in relation to any transfer which does not comply in all material respects with the provisions of this Novation Agreement;
|
2.2
|
Notwithstanding the provisions of Paragraph 2.1, the Transferor shall be bound and continue to be bound by this Paragraph 2.2 (which shall take effect as an agreement separate and independent from the Management Agreement and/or any side agreement), to observe and perform such duties of confidentiality and non-disclosure owed to the other parties to the Management Agreement or any side agreement as would have been applicable to it under the Management Agreement or any side agreement had it continued to be a party to those agreements in respect of the Transferred Interest.
|
2.3
|
This Novation Agreement shall be treated as constituting all actions, confirmations, consents and undertakings required of the Transferor, the Transferee and the Remaining Party under the Management Agreement or any side agreement for the purpose of giving effect to the transfer to the Transferee of the Transferred Interest.
|
2.4
|
Each reference in this Novation Agreement to the Management Agreement or any side agreement shall be construed and shall have effect as a reference to the same as it may have been supplemented and/or amended and/or novated and/or extended.
|
3.
|
Amendment of Management Agreement
|
3.1
|
With effect on and from the Transfer Date:
|
3.1.1
|
Clause 3.3.10 of the Management Agreement is deleted and replaced with:
|
3.1.2
|
Schedule 2 of the Management Agreement is deleted in its entirety.
|
3.1.3
|
In clause 1.1 of the Management Agreement, the words “and the subsidiaries of the Company listed on
Schedule 1
to this Agreement” are deleted and Schedule 1 is deleted in its entirety.
|
3.1.4
|
In clause 3.3.3(c) of the Management Agreement, the words “arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing” are deleted and replaced with “be authorised to make payments to third parties on behalf of the Company using the Company’s funds, and may pursue”.
|
3.1.5
|
In clause 3.3.3(d) of the Management Agreement, the words “settle all inter-company accounts between the Company and other companies in the Seadrill Group” are deleted and replaced with “be authorised to make payments to other companies in the Seadrill Group on behalf of the Company using the Company’s funds”.
|
3.1.6
|
Clauses 5.1 to 5.4 of the Management Agreement are deleted and replaced with:
|
3.1.7
|
In clause 9.1 of the Management Agreement, the words “shall have an initial term of five (5) years unless” are deleted and replaced with “may be”.
|
3.1.8
|
In clause 9.2 of the Management Agreement, the two references to “Manager’s employees” are deleted and replaced with “Manager’s Officers”.
|
3.1.9
|
Clause 10 of the Management Agreement is deleted and replaced with “The Manager shall be under no liability of any kind or nature whatsoever in the event of a failure to perform any of the Management Services if such failure is directly or indirectly caused by any event beyond the Manager’s control, including (without limitation) war, war-like activities, government order, riot, civil commotion, strike or lock-out or similar actions, acts of God, perils of the sea or any other similar cause beyond the Manager's control.”
|
3.1.10
|
In clause 12 of the Management Agreement, the address of the Company is amended to “Seadrill Partners LLC, 2nd Floor, Building 11, Chiswick Business Park, 566 Chiswick High Road, London W4 5YS” and the address of the Manager is amended to “Seadrill Management Ltd, 2nd Floor, Building 11, Chiswick Business Park, 566 Chiswick High Road, London W4 5YS”.
|
4.
|
Miscellaneous
|
4.1
|
This Novation Agreement may be executed in any number of counterparts to the same effect as if the executions on the counterparts were on a single text of this Novation Agreement but shall not be completed and take effect until each Party has executed a counterpart.
|
4.2
|
This Novation Agreement shall be governed by and construed in accordance with English law and each of the Transferor, the Transferee and the Remaining Party hereby irrevocably agrees that the courts of England shall have exclusive jurisdiction in relation to any claim, dispute or difference concerning this Novation Agreement and any matter arising in respect of this Novation Agreement.
|
4.3
|
Save as expressly provided in this Novation Agreement, all other provisions of the Management Agreement shall remain in full force and effect and shall be binding on the parties thereto, insofar as the same are in force and effect and binding on those parties immediately prior to the date first written above.
|
4.4
|
The parties intend that no provision of this Novation Agreement shall, by virtue of the Contracts (Rights of Third Parties) Act 1999, confer any benefit on nor be enforceable by any person who is not a party to this Novation Agreement.
|
(1)
|
Seadrill Hungary Kft
(the "
Lender
")
|
(2)
|
Seadrill Limited
(the "
Borrower
")
|
(A)
|
Seadrill Limited (“
SDRL
”) owns 46.6% of Seadrill Partners LLC (“
SDLP
”).
|
(B)
|
SDRL owns 49% and SDLP owns 51% of Seadrill Capricorn Holdings LLC (“
Capricorn
”).
|
(C)
|
Seadrill Neptune Hungary Kft (“
Neptune
”) is a wholly owned subsidiary of SDRL, and both the Lender, which is the rig owner of the
West Sirius
, and Seadrill Gulf Operations Sirius LLC (“
Sirius
”), which is the bareboat charterer of the
West Sirius
, are wholly owned subsidiaries of Capricorn.
|
(D)
|
Due to the termination of the drilling contract for the
West Sirius
made between BP and Sirius, BP is obliged to pay to Sirius monthly termination payments until July 23, 2017 (the “
BP Termination Payments
”).
|
(E)
|
Sirius, in turn, is obliged to pay the Lender USD 143,000,000 as the balance of the termination fee due under the bareboat charter agreement for the
West Sirius
(the “
BBC Termination Fee
”).
|
(F)
|
Neptune has agreed to make a loan (the “
Sirius Loan
”) in the amount of USD 143,000,000 to Sirius to enable Sirius to pay the BBC Termination Fee, which loan is governed by a loan agreement dated as of the date hereof (the “
Sirius Loan Agreement
”). The Lender, as the sister of Sirius, and the Borrower, as the parent of Neptune, have each received a copy of the Sirius Loan Agreement.
|
(G)
|
The Lender has agreed, on the terms set forth herein, to make a loan in the amount of USD 143,000,000 to the Borrower.
|
1.
|
EFFECTIVE DATE
|
2.
|
LOAN AND PURPOSE
|
2.1
|
The Lender agrees to make a loan in the amount of USD 143,000,000 (the “
Loan
”)
to the Borrower on the terms and conditions set out herein.
|
2.2
|
The purpose of the Loan is to provide cash to the Borrower to be used by the Borrower and its subsidiaries for satisfying working capital requirements.
|
2.3
|
The Parties agree that the Loan shall be deemed disbursed to the Borrower as of the Effective Date.
|
3.
|
INTEREST
|
3.1
|
The Borrower shall, with effect from the Effective Date, pay interest on the outstanding balance of the Loan at a rate equal to the sum of 0.56% per annum plus one-month LIBOR (determined two business days before the start of the relevant interest period) until repayment of the Loan in full.
|
3.2
|
In the event of the non-payment of an amount hereunder by the Borrower on the relevant due date (including as a result of the operation of Section 4.4 below), a default interest rate of 2% per annum plus one-month LIBOR (determined as of each day) shall apply from (and including) the date subsequent to such date until the applicable non-payment has been effected.
|
4.
|
REPAYMENT
|
4.1
|
Effective from the Effective Date, but subject to the conditions contained in Section 4.4 below, the Borrower shall repay the Loan to the Lender in monthly installments that correspond to the amounts of the BP Termination Payments made in any such month, plus any accrued and unpaid interest on the principal amount of the Loan repaid. The Borrower shall make each payment no later than the business day immediately following the day on which the BP Termination Payment is made.
|
4.2
|
Subject to the conditions contained in Section 4.4 below, any amounts of principal and interest on the Loan that remain outstanding following the final settlement of the BP Termination Payments shall be repaid in full on August 31, 2017.
|
4.3
|
Notwithstanding anything to the contrary contained in this Section 4, the Borrower shall be entitled to prepay the Loan in full or in part at any time without penalty.
|
4.4
|
The Parties acknowledge and agree that (i) the obligation of the Borrower to make any payment of principal or interest then due on the Loan as provided in Section 4.1, Section 4.2 or Section 7.2 is conditioned on the prior or contemporaneous payment (the “
Sirius Loan Payment
”) by Sirius to Neptune of an equivalent amount of principal and interest on the Sirius Loan and (ii) in the event that such Sirius Loan Payment is not paid by Sirius to Neptune in full when due, the obligation of the Borrower to make the payment of principal or interest then due on the Loan pursuant to Section 4.1, Section 4.2, or Section 7.2, as the case may be, shall be deferred until such date as Sirius makes such Sirius Loan Payment in full to Neptune. The Parties further acknowledge and agree, for the avoidance of doubt, that this Section 4.4 defers only the timing of one or more payments on the Loan required to be made by the Borrower to the Lender under this Section 4, but does not otherwise limit, reduce, or modify in any respect the Borrower’s obligation to repay to the Lender all outstanding principal and accrued and unpaid interest on the Loan.
|
4.5
|
In order to facilitate the payment arrangements described in Section 4.4, the Parties agree for the benefit of Neptune, Sirius, and each Party hereto to use commercially reasonable efforts (i) to coordinate with Neptune and Sirius the timing, making and receipt of payments under this Agreement and under the Sirius Loan Agreement and (ii) to confer, in the event any payment on the Loan is deferred for more than twelve consecutive months, in good faith with the other Party hereto, Neptune and Sirius to determine the reasons for the deferral and to consider other means to enable the deferred payments to be made as promptly as practicable.
|
4.6
|
The Parties acknowledge and agree, for the benefit of Neptune, Sirius and each Party hereto, that (i) the Parties hereto intend that this Agreement and the Sirius Loan Agreement (the “
Related Documents
”) be construed as consistent agreements operating in parallel with each other, (ii) Neptune, Sirius, and each Party hereto have entered into the Related Documents on this basis, and (iii) the Borrower will make, and has been advised that Sirius has agreed to make, all required payments under the Related Documents without giving effect to any rights of offset, counterclaim, or transfers of receivables or liabilities between the Parties hereto, Neptune, and Sirius not contained within the Related Documents.
|
5.
|
PARI PASSU RANKING
|
5.1
|
The amounts from time to time outstanding hereunder shall be unsecured.
|
5.2
|
The Borrower’s payment obligations under this Agreement shall have equal rank to the claims of all of the Borrower’s other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
|
6.
|
TAX GROSS UP
|
7.
|
EVENTS OF DEFAULT
|
7.1
|
Each of the events or circumstances set out below constitutes an event of default (“
Event of Default
”):
|
(i)
|
the Borrower fails to pay any sum payable under this Agreement when due (taking into account the operation of Section 4.4 and unless its failure to pay is caused by administrative or technical error) and the Lender notifies the Borrower in writing of such failure to pay, unless payment is made within three business days after receipt of such notice;
|
(ii)
|
the Borrower is unable or admits inability to pay its debts as they fall due, or suspends making payments on its debts generally; or
|
(iii)
|
any corporate action, legal proceedings or other procedure or step is taken in relation to bankruptcy or insolvency proceedings in respect of the Borrower, the winding up or dissolution of the Borrower (save for the purposes of a solvent reorganization), the enforcement of security over any material portion of the Borrower’s assets or any enforcement of any material debts of the Borrower.
|
7.2
|
On and at any time after the occurrence and during the continuance of an Event of Default the Lender may, by notice to the Borrower:
|
(i)
|
declare the Loan, together with accrued interest, and all other amounts accrued or outstanding under this Agreement to be immediately due and payable, whereupon they shall become immediately due and payable; and/or
|
(ii)
|
exercise any or all of its rights, remedies and powers under this Agreement or otherwise;
|
8.
|
COSTS AND EXPENSES
|
9.
|
GOVERNING LAW; JURISDICTION; CERTAIN THIRD PARTY RIGHTS
|
9.1
|
This Agreement and any dispute or claim arising out of, or in connection with, it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the law of England and Wales.
|
9.2
|
Each Party irrevocably agrees that, subject as provided below, the courts of England and Wales shall have exclusive jurisdiction over any dispute or claim that arises out of, or in connection with, this Agreement or its subject matter or formation (including non-contractual disputes or claims). Nothing in this clause shall limit the right of the Lender to take proceedings against the Borrower in any other court of competent jurisdiction, nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdictions, whether concurrently or not, to the extent permitted by the law of such other jurisdiction.
|
9.3
|
A person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or enjoy the benefit of any term of this Agreement, except for Neptune and Sirius with respect to their rights under Section 4.5 and Section 4.6 only.
|
9.4
|
Notwithstanding any term of any Related Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.
|
10.
|
RESTATEMENT
|
Lender
For and on behalf of
Seadrill Hungary Kft
Signature:
/s/ Attila Urbanovics
Name:
Attila Urbanovics
Title: Managing Director
Signature:
/s/ John T. Roche
Name: John T. Roche
Title: Managing Director |
Borrower
For and on behalf of
Seadrill Limited
Signature:
/s/ Georgina Sousa
Name: Georgina Sousa
Title: Director and Secretary |
(1)
|
Seadrill Neptune Hungary Kft
(the "
Lender
")
|
(2)
|
Seadrill Gulf Operations Sirius LLC
(the "
Borrower
")
|
(A)
|
Seadrill Limited (“
SDRL
”) owns 46.6% of Seadrill Partners LLC (“
SDLP
”).
|
(B)
|
SDRL owns 49% and SDLP owns 51% of Seadrill Capricorn Holdings LLC (“
Capricorn
”).
|
(C)
|
The Lender is a wholly owned subsidiary of SDRL, and both Seadrill Hungary Kft (“
Hungary
”), which is the rig owner of the
West Sirius,
and the Borrower, which is the bareboat charterer of the
West Sirius
, are wholly owned subsidiaries of Capricorn.
|
(D)
|
Due to the termination of the drilling contract for the
West Sirius
made between BP and the Borrower, BP is obliged to pay to the Borrower monthly termination payments until July 23, 2017 (the “
BP Termination Payments
”).
|
(E)
|
The Borrower, in turn, is obliged to pay Hungary USD 143,000,000 as the balance of the termination fee due under the bareboat charter agreement for the
West Sirius
(the “
BBC Termination Fee
”).
|
(F)
|
The Lender has agreed, on the terms set forth herein, to make a loan in the amount of USD 143,000,000 to the Borrower in order to enable the Borrower to pay the BBC Termination Fee.
|
(G)
|
Hungary has agreed to make a loan in the amount of USD 143,000,000 to SDRL (the “
SDRL Loan
”) which is governed by a loan agreement dated as of the date hereof (the “
SDRL Loan Agreement
”). The Lender, as the subsidiary of SDRL, and the Borrower, as the sister of Hungary, have each received a copy of the SDRL Loan Agreement.
|
1.
|
EFFECTIVE DATE
|
2.
|
LOAN AND PURPOSE
|
2.1
|
The Lender agrees to make a loan in the amount of USD 143,000,000 (the “
Loan
”)
to the Borrower on the terms and conditions set out herein.
|
2.2
|
The purpose of the Loan is to provide the Borrower with the funds it requires to pay the BBC Termination Fee.
|
2.3
|
The Parties agree that the Loan shall be deemed disbursed to the Borrower as of the Effective Date.
|
3.
|
INTEREST
|
3.1
|
The Borrower shall, with effect from the Effective Date, pay interest on the outstanding balance of the Loan at a rate equal to the sum of 0.56% per annum plus one-month LIBOR (determined two business days before the start of the relevant interest period) until repayment of the Loan in full.
|
3.2
|
In the event of the non-payment of an amount hereunder by the Borrower on the relevant due date (including as a result of the operation of Section 4.4 below), a default interest rate of 2% per annum plus one-month LIBOR (determined as of each day) shall apply from (and including) the date subsequent to such date until the applicable non-payment has been effected.
|
4.
|
REPAYMENT
|
4.1
|
Effective from the Effective Date, but subject to the conditions contained in Section 4.4 below, the Borrower shall repay the Loan to the Lender in monthly installments that correspond to the amounts of the BP Termination Payments received by the Borrower in any month, plus any accrued and unpaid interest on the principal amount of the Loan repaid. The Borrower shall make each payment no later than the business day immediately following the day on which the Borrower receives a BP Termination Payment.
|
4.2
|
Subject to the conditions contained in Section 4.4 below, any amounts of principal and interest on the Loan that remain outstanding following the final settlement of the BP Termination Payments shall be repaid in full on August 31, 2017.
|
4.3
|
Notwithstanding anything to the contrary contained in this Section 4, the Borrower shall be entitled to prepay the Loan in full or in part at any time without penalty.
|
4.4
|
The Parties acknowledge and agree that (i) the obligation of the Borrower to make any payment of principal or interest then due on the Loan as provided in Section 4.1, Section 4.2 or Section 7.2 is conditioned on the prior or contemporaneous payment (the “
SDRL Loan Payment
”) by SDRL to Hungary of an equivalent amount of principal and interest on the SDRL Loan and (ii) in the event that such SDRL Loan Payment is not paid by SDRL to Hungary in full when due, the obligation of the Borrower to make the payment of principal or interest then due on the Loan pursuant to Section 4.1, Section 4.2, or Section 7.2, as the case may be, shall be deferred until such date as SDRL makes such SDRL Loan Payment in full to Hungary. The Parties further acknowledge and agree, for the avoidance of doubt, that this Section 4.4 defers only the timing of one or more payments on the Loan required to be made by the Borrower to the Lender under this Section 4, but does not otherwise limit, reduce, or modify in any respect the Borrower’s obligation to repay to the Lender all outstanding principal and accrued and unpaid interest on the Loan.
|
4.5
|
In order to facilitate the payment arrangements described in Section 4.4, the Parties agree for the benefit of SDRL, Hungary, and each Party hereto to use commercially reasonable efforts (i) to coordinate with Hungary and SDRL the timing, making and receipt of payments under this Agreement and under the SDRL Loan Agreement and (ii) to confer, in the event any payment on the Loan is deferred for more than twelve consecutive months, in good faith with the other Party hereto, SDRL and Hungary to determine the reasons for the deferral and to consider other means to enable the deferred payments to be made as promptly as practicable.
|
4.6
|
The Parties acknowledge and agree, for the benefit of SDRL, Hungary and each Party hereto, that (i) the Parties hereto intend that this Agreement and the SDRL Loan Agreement (the “
Related Documents
”) be construed as consistent agreements operating in parallel with each other, (ii) SDRL, Hungary and each Party hereto have entered into the Related Documents on this basis, and (iii) the Borrower will make, and has been advised that SDRL has agreed to make, all required payments under the Related Documents without giving effect to any rights of offset, counterclaim, or transfers of receivables or liabilities between the Parties hereto, SDRL and Hungary not contained within the Related Documents.
|
5.
|
PARI PASSU RANKING
|
5.1
|
The amounts from time to time outstanding hereunder shall be unsecured.
|
5.2
|
The Borrower’s payment obligations under this Agreement shall have equal rank to the claims of all of the Borrower’s other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
|
6.
|
TAX GROSS UP
|
7.
|
EVENTS OF DEFAULT
|
7.1
|
Each of the events or circumstances set out below constitutes an event of default (“
Event of Default
”):
|
(i)
|
the Borrower fails to pay any sum payable under this Agreement when due (taking into account the operation of Section 4.4 and unless its failure to pay is caused by administrative or technical error) and the Lender notifies the Borrower in writing of such failure to pay, unless payment is made within three business days after receipt of such notice;
|
(ii)
|
the Borrower is unable or admits its inability to pay its debts as they fall due or suspends making payments on its debts generally; or
|
(iii)
|
any corporate action, legal proceedings or other procedure or step is taken in relation to bankruptcy or insolvency proceedings in respect of the Borrower, the winding up or dissolution of the Borrower (save for the purposes of a solvent reorganization), the enforcement of security over any material portion of the Borrower’s assets or any enforcement of any material debts of the Borrower.
|
7.2
|
On and at any time after the occurrence and during the continuance of an Event of Default the Lender may, by notice to the Borrower:
|
(i)
|
declare the Loan, together with accrued interest, and all other amounts accrued or outstanding under this Agreement to be immediately due and payable, whereupon they shall become immediately due and payable; and/or
|
(ii)
|
exercise any or all of its rights, remedies and powers under this Agreement or otherwise;
|
8.
|
COSTS AND EXPENSES
|
9.
|
GOVERNING LAW; JURISDICTION; CERTAIN THIRD PARTY RIGHTS
|
9.1
|
This Agreement and any dispute or claim arising out of, or in connection with, it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the law of England and Wales.
|
9.2
|
Each Party irrevocably agrees that, subject as provided below, the courts of England and Wales shall have exclusive jurisdiction over any dispute or claim that arises out of, or in connection with, this Agreement or its subject matter or formation (including non-contractual disputes or claims). Nothing in this clause shall limit the right of the Lender to take proceedings against the Borrower in any other court of competent jurisdiction, nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdictions, whether concurrently or not, to the extent permitted by the law of such other jurisdiction.
|
9.3
|
A person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or enjoy the benefit of any term of this Agreement, except for SDRL and Hungary with respect to their rights under Section 4.5 and Section 4.6 only.
|
9.4
|
Notwithstanding any term of any Related Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.
|
10.
|
RESTATEMENT
|
Lender
For and on behalf of
Seadrill Neptune Hungary Kft
Signature:
/s/ Attila Urbanovics
Name: Attila Urbanovics
Title: Managing Director
Signature:
/s/ David S. Sneddon
Name: David S. Sneddon
Title: Managing Director |
Borrower
For and on behalf of
Seadrill Gulf Operations Sirius LLC
Signature:
/s/ Jennifer Slivensky
Name: Jennifer Slivensky
Title: Treasurer |
|
|
To:
|
Seadrill Limited
c/o Seadrill Management Ltd. 2 nd Floor, Building 11, Chiswick Business Park 566 Chiswick High Road London W4 5YS United Kingdom |
Attn:
|
Jonas Ytreland
|
1.
|
CONSENT
|
2.
|
AMENDMENTS TO THE FACILITY AGREEMENT
|
(a)
|
On the Effective Date, the amendments to the Facility Agreement set out in schedule 1 (
Amendments to the Facility Agreement
) to this letter will be made to the Facility Agreement to reflect the consent of the Agent (on behalf of the Required Lenders) to the Amendment Request in accordance with paragraph 1 above.
|
(b)
|
For the avoidance of doubt, clause 8.3 (
Minimum Market Value
) of the Facility Agreement will not apply whilst the minimum Market Value covenant in clause 24.1 (
Minimum Market Value
) of the Facility Agreement is suspended.
|
(c)
|
The amendments to the Facility Agreement in schedule 1 (Amendments to the Facility Agreement) to this letter (other than paragraphs 2, 3, 5, 6, 10, 11 and 12 of schedule 1) and the Agent’s confirmation in paragraph 5 below shall only be effective until the Deferral Date, on which date such amendments will be reversed, such confirmation shall cease to have effect and the rights and remedies available to the Lenders prior to the making of such amendments and such confirmation shall be reinstated in full.
|
3.
|
CONDITIONS PRECEDENT
|
|
|
|
4.
|
PARENT’S UNDERTAKINGS
|
(a)
|
it shall:
|
(i)
|
by no later than 16 May 2016 provide to the Co-Com and Co-Com Advisors an indicative legal analysis prepared by the Parent and its advisors for contingency planning purposes including without limitation in respect of (1) the potential use of an English and/or local law scheme of arrangement to implement a non-consensual restructuring, (2) the potential use of a US Chapter 11 plan of reorganisation to implement a non-consensual restructuring, and (3) the potential legal impact on the Parent of a change in governing law, in each case with respect to the Group Facility Agreements and any other instrument relating to Financial Indebtedness of any member of the Group;
|
(ii)
|
by no later than 16 May 2016, present to the Co-Com and the Co-Com Advisors its proposals for the recapitalisation of the Group broadly consistent with the proposals presented by the Parent to the Co-Com at the meeting between the Parent and the Co-Com on 10 March 2016 and showing sustainability of funding through 2020, accompanied by an updated financial model with assumptions based on updated feedback from Fearnleys and in respect of cost items assumptions based on any guidance provided by the Parent to the capital markets;
|
(iii)
|
by no later than 30 June 2016, present to the lenders and each of the facility agents under the Group Facility Agreements for approval amendment and extension requests setting out its proposals for the recapitalisation of the Group showing sustainability of funding through 2020 (taking into account input from the Co-Com and the Co-Com Advisors);
|
(iv)
|
at any time after the presentation of amendment and extension requests for approval pursuant to paragraph (iii) above and by no later than 1 September 2016, if requested by the Co-Com on not less than 10 calendar days’ prior notice, on a single occasion, host a meeting for the Co-Com (and, if requested by the Co-Com, all lenders under the Group Facility Agreements) at which the Parent will present an update on the status
|
|
2
|
|
(v)
|
use reasonable endeavours to ensure that by no later than 31 December 2016 and otherwise to ensure that by no later than 30 April 2017, the amendments contemplated in the amendment and extension requests presented for approval pursuant to paragraph (iii) above have become effective and its proposed recapitalisation of the Group has been implemented on terms satisfactory to the Required Lenders,
|
(A)
|
each of the dates given in the Milestones above (other than the Milestones set out in paragraphs (iv) and (v) above for which no grace period applies) is subject to a grace period of 15 calendar days, or 30 calendar days in respect of the Milestone set out in paragraph (iii) above; and
|
(B)
|
each Milestone, on a single occasion only, may be varied at the written request of the Parent with the consent of the Agent in its sole discretion if the request relates to a further delay of 15 calendar days beyond either the due date or (if applicable) the end of the grace period referred to in (A) above. Other than to the extent that the Required Lenders notify the Agent in writing to the contrary before the Agent gives such a consent, the Required Lenders are by their approval of this letter deemed to have authorised (but not required) the Agent to give that consent. The Agent confirms that it has considered whether it is able to consent to such a delay without requiring instructions from the Required Lenders in addition to the terms of this letter and has satisfied itself that it is able to do so. The Agent shall not be liable for any damages, costs or losses whatsoever as a result of giving any such consent;
|
(b)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period incur or allow to remain outstanding any Financial Indebtedness other than Permitted Financial Indebtedness;
|
(c)
|
during the Negotiation Period, it shall not, irrespective of any term of the Finance Documents to the contrary:
|
(i)
|
make any dividend payments or other distributions in respect of its share capital to its shareholders;
|
(ii)
|
enter into new total return swaps (for the avoidance of doubt, excluding roll-over or unwinding, in whole or in part, of existing total return swaps (which roll-over or unwinding will include the purchase of shares and corresponding reduction of any such existing total return swap)) or enter into similar transactions with similar effect; or
|
(iii)
|
buy back or redeem any shares in its capital,
|
|
3
|
|
(d)
|
during the Negotiation Period, it shall not (and it shall procure that no other member of the Group shall) prepay, repay, purchase or otherwise acquire, in each case voluntarily, any loans under any of the Group Facility Agreements (provided that it shall not be prohibited from taking any action with respect to Financial Indebtedness as described in sub-paragraph (iv) of the definition of Permitted Financial Indebtedness);
|
(e)
|
during the Negotiation Period, it shall not (and it shall procure that no other member of the Group shall) buy back or redeem, in each case voluntarily, any bonds or notes issued by it;
|
(f)
|
during the Negotiation Period, it shall not (and it shall procure that no other member of the Group shall) voluntarily close out any hedging or derivative transaction entered into with any person who is not a member of the Group except for the voluntary closing out of hedging or derivative transactions (A) where the Group is over-hedged and only the over-hedged position is being closed out or (B) where the same does not crystallise cash outflows for members of the Group during the Negotiation Period other than scheduled payments in the ordinary course under the terms of the restructured hedging or derivative transaction and so that any negative values are baked into the rates agreed as part of the restructuring;
|
(g)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period acquire a company or any shares or a business or undertaking (or, in each case, any interest in any of them) or make any equity injections or contributions in each case except for Permitted Acquisitions;
|
(h)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset other than as part of a Permitted Disposal;
|
(i)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period make any payment to any person who is not a member of the Group under any Newbuild Contract, other than any Permitted Newbuild Contract Payments;
|
(j)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period provide, procure, create or permit to subsist any Financial Support other than any Permitted Financial Support;
|
(k)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period:
|
(i)
|
make any payment pursuant to any Newbuild Contract existing as at the Request Date (other than payments falling within paragraphs (i) to (iii) or (v) of the definition of Permitted Newbuild Contract Payments);
|
(ii)
|
make any payment to, or for the benefit of, any member of the Minority Holding Group:
|
(1)
|
under any Existing Financial Support Arrangements provided, procured, created or permitted to subsist to or for the benefit of such member of the Minority Holding Group (including, without limitation, any Financial Support
|
|
4
|
|
(2)
|
in respect of any Financial Support provided, procured, created or permitted to subsist by any member of the Group to or for the benefit of Seamex Ltd. and/or any of Seamex Ltd.’s Subsidiaries; or
|
(3)
|
in respect of any Financial Support which is provided, procured, created or permitted to subsist in connection with the replacement, refinancing, amendment or extension (or in the case of the Rubi Guarantees, issuance) of bank guarantees and letters of credit with a maturity date falling within the Negotiation Period,
|
(A)
|
in advance of making any such Cash Leakage Payment, the Parent shall, with appropriate legal advice, consider the rights and obligations of the relevant parties with respect to such Cash Leakage Payment to determine whether that Cash Leakage Payment can be legally reduced, postponed, cancelled or otherwise avoided under the terms of the agreement under which the requirement to make that Cash Leakage Payment arises or any related agreements, in each case without materially and adversely affecting the interests of the Group and its financial creditors;
|
(B)
|
if the Parent determines acting reasonably that the Cash Leakage Payment can be so reduced, postponed, cancelled or otherwise avoided, the Parent shall use its reasonable endeavours to achieve the same;
|
(C)
|
if the Parent determines acting reasonably that the Cash Leakage Payment cannot be so reduced, postponed, cancelled or otherwise avoided, unless the Parent acting reasonably considers that to do so would not be in the interests of the Group and its financial creditors (because for example, but without limitation, the same risks resulting in additional amounts being claimed from members of the Group) the Parent shall:
|
(1)
|
use its reasonable endeavours to engage with the relevant payee (or such other party whose consent may be required) to negotiate in good faith a consensual reduction, postponement, cancellation or other avoidance of the Cash Leakage Payment;
|
(2)
|
promptly provide the Co-Com with details of any proposal made by the Parent to the relevant payee (including, without limitation, with respect to the negotiation in respect of the Archer Equity Undertaking); and
|
(3)
|
keep the Co-Com updated as to any material developments with respect to such negotiation and provide the Co-Com with all
|
|
5
|
|
(D)
|
the Parent shall give the Co-Com notice as soon as reasonably practicable on becoming aware that it has become obliged, or is likely to become obliged within a period of 30 calendar days, to make a Cash Leakage Payment, and shall provide the Co-Com with all information as the Co-Com may reasonably request and which the Parent is legally permitted to provide with respect to that Cash Leakage Payment and its circumstances,
|
(l)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period create or permit to subsist any Security Interest over any of its assets other than Permitted Security;
|
(m)
|
it shall not, and shall procure that no other member of the Group shall, during the Negotiation Period enter into any agreement in respect of the extension of the final maturity date under any Maturing Facility Agreement other than (A) on terms satisfactory to the Required Lenders and the Required Lenders, Required Majority or Majority Lenders (as therein defined) under each other Group Facility Agreement or (B) any agreement entered into pursuant to the extension approval letters relating to the Maturing Facility Agreements dated on or about the date of this letter;
|
(n)
|
it shall not, and shall procure that no other member of the Group shall, during the Negotiation Period agree to amendments to any of the other Group Facility Agreements or any other instrument relating to Financial Indebtedness of any member of the Group (provided that this provision shall apply only to amendments to any of the Group Facility Agreements, any of the Ship Finance Arrangements or any hedging agreement entered into by any Group member except in respect of amendments to economics) on more favourable terms in any material respect than are provided with respect to the Facility Agreement or, with respect to an extension of tenor, the Maturing Facility Agreements other than any amendments (A) contemplated by the proposals for the recapitalisation of the Group described in paragraphs (a)(ii) and (a)(iii) above, (B) arising from the extension of the Maturing Facility Agreements on the basis agreed with the Required Lenders or any agreement entered into pursuant to the extension approval letters dated on or about the date of this letter or (C) in the case of amendments to economics of any instrument relating to Financial Indebtedness of the Group (other than any of the Group Facility Agreements, any of the Ship Finance Arrangements or any hedging agreement) entered into by any Group member,
|
|
6
|
|
(o)
|
during the Negotiation Period, if any member of the Group agrees to pay higher compensation relative to the Facility Agreement or, with respect to an extension, the Maturing Facility Agreements (whether in the form of margin increases, consent fees or otherwise), save as (A) contemplated by the proposals for the recapitalisation of the Group described in paragraphs (a)(ii) and (a)(iii) above or (B) arising from the extension of the Maturing Facility Agreements on the basis agreed with the Required Lenders or any agreement entered into pursuant to the extension approval letters relating to the Maturing Facility Agreements dated on or about the date of this letter to secure amendments in any of the other Group Facility Agreements or any other instrument relating to Financial Indebtedness of any member of the Group, it will procure that the terms of the Facility Agreement are amended to reflect this higher compensation and will enter into, or procure that such other member of the Group enters into, such documents as the Agent may reasonably require in order to reflect such higher compensation, save to the extent that the aggregate cost to the Group under this paragraph 4(o) and under paragraph 4(n) above does not exceed USD25,000,000 (or its equivalent in other currencies);
|
(p)
|
during the Negotiation Period it shall cooperate in good faith with the finance parties under the Group Facility Agreements for the appointment of (i) a financial advisor for them (the “Financial Advisor”), (ii) a coordinating committee of them (the “
Co-Com
”) and (iii) Norwegian and international counsel for them (together with the Financial Advisor, the “
Co-Com Advisors
”), in each case as soon as reasonably practicable and on terms (including as to the scope of the Financial Advisor’s work) to be agreed (acting reasonably);
|
(q)
|
it shall reimburse the agents, lenders and export credit agencies under the Group Facility Agreements for the properly incurred and documented fees of the Co-Com and the Co-Com Advisors in connection with the recapitalisation of the Group incurred in accordance with the terms and scope of work agreed in the engagement letters relating to the appointment of the Co-Com and the Co-Com Advisors agreed by the Parent;
|
(r)
|
it shall in good faith consider the requirements of the Co-Com in framing the proposal for the recapitalisation of the Group;
|
(s)
|
during the Negotiation Period it shall co-operate with the Co-Com Advisors and, subject to paragraph (v)(ii), provide them with information relating to the Group reasonably requested by them, in the case of the Financial Advisor consistent with the agreed scope of work;
|
(t)
|
during the Negotiation Period it shall provide the Co-Com with regular updates on the status of its plans for and developments in relation to the bonds and notes issued by the Parent and of its proposal for the recapitalisation of the Group;
|
(u)
|
during the Negotiation Period it shall:
|
(i)
|
use its reasonable endeavours to cooperate with the Co-Com and Co-Com Advisors in relation to contingency planning in case a consensual restructuring is not achievable, subject always to the fiduciary and other duties of the boards of directors of the Parent and other members of the Group; and
|
(ii)
|
make such senior management or officers of the Parent, and each other member of the Group, as the Co-Com may reasonably request, available to provide reasonable
|
|
7
|
|
(iii)
|
subject to paragraph (v)(ii), provide the Co-Com with all information in respect of, and access to, the business of the Group reasonably requested by the Co-Com to complete any due diligence in relation to the recapitalisation proposal as soon as reasonably practicable;
|
(i)
|
subject to paragraph (ii) below, it shall (and shall ensure that each member of the Group shall) during the Negotiation Period upon reasonable notice, supply the Co-Com with such information in relation to the Group as is available to it or any member of the Group as the Co-Com may reasonably require in connection with the restructuring of the Group’s debt;
|
(ii)
|
notwithstanding any provision in the Finance Documents to the contrary, neither it nor any member of the Group shall be required to provide any information which is either (A) subject to a duty of confidentiality owed to a third party, (B) of a highly commercially sensitive nature, or (C) legally privileged provided that should the Parent decline to provide any information to the Co-Com in reliance on paragraph (A), (B) or (C) the Parent shall provide such information to the Co-Com Advisors only in the case of paragraph (B), and in each case shall inform the Co-Com of the basis for refusal to provide the information to the CoCom and shall at the request of the Co-Com comply with paragraph (iii) below; and
|
(iii)
|
it shall, at the request of the Co-Com, either (A) seek the consent of any party to whom it owes a duty of confidentiality with respect to the information (provided that it shall not be required to seek consent where the Parent reasonably considers that to do so would be commercially damaging) or (B) consider in conjunction with its advisers whether the relevant information can be provided in such a way or format as to avoid issues of third party confidentiality, commercial sensitivity or legal privilege, including but not limited to by redaction, summary or provision of information to the Co-Com or to the Co-Com Advisors only and if such information can be so provided the Parent will procure that it is so provided as soon as reasonably practicable;
|
(w)
|
during the Negotiation Period it shall provide the Co-Com with a monthly information update in the format agreed with the Co-Com prior to the date of this letter and derived from the Group’s existing management reporting, which shall include:
|
(i)
|
latest cash flow information;
|
(ii)
|
an update on material trade creditors and trade debtors of the Group;
|
(iii)
|
an update on the planned maintenance and docking of the rigs and on progress with respect to new builds and new build contracts;
|
(iv)
|
an update on material changes in liabilities owed between members of the Group;
|
(v)
|
an update on swaps and/or other derivative transactions entered into by any member of the Group;
|
|
8
|
|
(vi)
|
an update on material changes in the contracts portfolio of the Group including any material contract renewals, cancellations, dayrate amendments or other re-negotiations;
|
(vii)
|
to the extent such undrawn commitments are available, details of any anticipated need for a member of the Group to utilise any undrawn commitments under any of the Group Facility Agreements in the next 90 days;
|
(viii)
|
an update on steps taken by the Parent and other members of the Group to procure and maximise payments from each member of the Minority Holding Group to the Group;
|
(ix)
|
an update on steps taken by the Parent and other members of the Group in accordance with paragraph 4(k) above including (subject to paragraph (v)(ii)) a summary or details (on a non-reliance basis) of advice obtained by the Parent or other relevant member of the Group with respect to the rights and obligations of the relevant parties with respect to any relevant Cash Leakage Payment;
|
(x)
|
an update on the aggregate amount of Financial Support which has been provided, procured, created or permitted to subsist by any member of the Group in connection with the replacement, refinancing, amendment, extension or (in the case of the Rubi Guarantees) issuance of bank guarantees and letters of credit and the forecasted reduction of such Financial Support during the Negotiation Period; and
|
(xi)
|
an updated assessment of potential cash leakage from the Group in the next 12 months pursuant to the Financial Support provided, procured, created or permitted to subsist to or for the benefit of any member of the Minority Holding Group and demands which may be made in respect of such Financial Support;
|
(x)
|
during the Negotiation Period, to the extent such undrawn commitments are available, it shall provide the Co-Com with not less than 15 calendar days’ notice of any anticipated utilisation by any member of the Group of undrawn commitments under any of the Group Facility Agreements; and
|
(y)
|
during the Negotiation Period it shall promptly notify the Co-Com of the occurrence of any of the matters described in paragraph 6(e) below and of the occurrence of any Deferral Date Event.
|
5.
|
AGENT’S CONFIRMATION
|
6.
|
AGREEMENT BY OBLIGORS
|
(a)
|
The Parent (for itself, as the Obligors’ agent pursuant to clause 2.4 (
Parent’s Authority
) of the Facility Agreement and as authorised signatory and/or attorney-in-fact for certain Obligors and/or security providers pursuant to powers of attorney) by its signature of this letter agrees and acknowledges that the guarantees and indemnities contained in the Facility Agreement and/or
|
|
9
|
|
(b)
|
The Parent (for itself, as the Obligors’ agent pursuant to clause 2.4 (
Parent’s Authority
) of the Facility Agreement and as authorised signatory and/or attorney-in-fact for certain Obligors and/or security providers pursuant to powers of attorney) by its signature of this letter agrees and acknowledges that, on and after the Effective Date:
|
(i)
|
the obligations of the Parent and each other Obligor arising under the Facility Agreement and/or each other Finance Document to which it or any other Obligor is a party constitute secured obligations (howsoever defined); and
|
(ii)
|
the Security Interests created by the Parent and each other Obligor under any Security Document:
|
(A)
|
continue in full force and effect; and
|
(B)
|
extend to the obligations of the Obligors under the Facility Agreement and/or the other Finance Documents (as amended and/or amended and restated from time to time) including as varied, amended, supplemented or extended by this letter, in each case subject to the limitations set out in the Security Documents.
|
(c)
|
The Parent by its signature of this letter, in its capacity as Parent, confirms that any Security Interest created pursuant to the Finance Documents by any party thereto shall, on and after the Effective Date, continue in full force and effect and extend to the liabilities and obligations of each of the Obligors under the Facility Agreement and the other Finance Documents (as amended and/or amended and restated from time to time) including as varied, amended, supplemented or extended by this letter.
|
(d)
|
The Parent (for itself, as the Obligors’ agent pursuant to clause 2.4 (
Parent’s Authority
) of the Facility Agreement and as authorised signatory and/or attorney-in-fact for certain Obligors and/or security providers pursuant to powers of attorney) shall at the request of the Agent and at its own expense, do all such acts and things reasonably necessary or desirable to give effect to the amendments effected or to be effected pursuant to this letter.
|
(e)
|
The Parent by its signature of this letter agrees that during the Negotiation Period:
|
(i)
|
the occurrence of the final maturity date under any Group Facility Agreement (as the same may be amended in accordance with the terms of that Group Facility Agreement) or an acceleration event under any Group Facility Agreement;
|
(ii)
|
an acceleration event in respect of any Financial Support provided, procured, created or permitted to subsist to or for the benefit of any member of the Minority Holding Group where the aggregate amount of such Financial Support exceeds USD50,000,000 (or its equivalent in other currencies); or
|
(iii)
|
failure to meet any of the Milestones within the period relevant to that Milestone specified in paragraph 4(a) of this letter as the same is extended by the applicable
|
|
10
|
|
(iv)
|
breach of any of the Undertakings, in each case unless such breach is capable of remedy and is remedied within 15 calendar days of such breach (other than any breach of the Undertakings set out in paragraph 4(k)),
|
7.
|
FEES, COSTS, DISBURSEMENTS AND OTHER AMOUNTS
|
(a)
|
The Parent shall pay to the Agent, for the account of each Lender who has agreed to the terms of the Amendment Request subject to the terms and conditions set out herein and informed the Agent thereof, a fee of 10 basis points calculated on that Lender’s available and outstanding Commitment.
|
(b)
|
The fee set out in paragraph (a) above, together with any fees, costs, disbursements or other amounts (and any VAT thereon) invoiced on or prior to the Effective Date (it being understood that each such invoice shall include details of the relevant payee (including name, bank account, sort code, IBAN and/or CHAPS) and a copy of each such invoice shall be provided to the attention of Jonas Ytreland at Seadrill Limited, 2nd Floor, Building 11, Chiswick Business Park, 566 Chiswick High Road, London W4 5YA and/or a scanned version sent to jonas.ytreland@seadrill.com) due and payable under or in connection with the documents referred to in paragraph 4 (
Co-Com Appointment Documents
) of schedule 2 (
Conditions Precedent
) to this letter shall be payable within five Business Days of the Effective Date.
|
8.
|
LENDERS’ RIGHTS
|
9.
|
CONTINUING AGREEMENT AND FINANCE DOCUMENT
|
(a)
|
Except as expressly consented to pursuant to this letter, the provisions of the Finance Documents including the Facility Agreement and Security Documents shall continue in full force and effect. The consent granted in this letter does not extend to any matter other than expressly set out in this letter.
|
(b)
|
The Agent and the Parent designate this letter a “Finance Document” for the purposes of the Facility Agreement.
|
|
11
|
|
(c)
|
The provisions of clauses 1.2 (
Construction
), 1.3 (
Third Party Rights
) and 32 (
Notices
) of the Facility Agreement apply to this letter as though they were set out in full in this letter except that references to the Facility Agreement are to be construed as references to this letter.
|
(d)
|
This letter may be executed in counterparts each of which, when taken together, shall constitute one and the same agreement.
|
(e)
|
This letter and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with English law. Any disputes resulting from this letter will be resolved in accordance with the terms of the Facility Agreement applicable to dispute resolution. These terms are incorporated into this letter by reference as if set out in full in this letter.
|
|
12
|
|
|
13
|
|
1.
|
The definition of “Equity” in clause 1.1 (
Definitions
) of the Facility Agreement shall be deleted and replaced as follows:
|
2.
|
If each of the Maturing Facility Agreements is extended pursuant to extension approval letters dated on or about the date of this letter, the definition of “Minimum Liquidity” in clause 1.1 (
Definitions
) of the Facility Agreement shall be deleted and replaced as follows:
|
3.
|
The definition of “Step-up Margin” in clause 1.1 (
Definitions
) of the Facility Agreement shall be deleted and replaced as follows:
|
(a)
|
if the Leverage Ratio is from and including 4.50:1 up to and including 4.99:1, 0.125 per cent per annum;
|
(b)
|
if the Leverage Ratio is from and including 5:00:1 up to and including 5.49:1, 0.250 per cent per annum;
|
(c)
|
if the Leverage Ratio is from and including 5.50:1 up to and including 5.99:1, 0.750 per cent per annum; and
|
(d)
|
if the Leverage Ratio is equal to or in excess of 6:00:1, 1.500 per cent per annum,
|
4.
|
The definition of “Total Assets” in clause 1.1 (
Definitions
) of the Facility Agreement shall be deleted and replaced as follows:
|
5.
|
Paragraph (b) of clause 21.4 (
Information – miscellaneous
) of the Facility Agreement shall be deleted and replaced as follows:
|
(i)
|
any breach of material contracts (including rig building contracts and charter contracts) or any material litigation, judgment, order, injunction, restraint, arbitration or administrative proceedings which is current, threatened, alleged or pending against any of the Obligors or any member of the Group; and
|
|
14
|
|
(ii)
|
any changes to the senior management of (A) the Parent or (B) any member of the Group where the change of senior management concerned is of material significance to the Group as a whole;”
|
6.
|
Clause 22.1 (
Minimum Liquidity
) of the Facility Agreement shall be deleted and replaced as follows:
|
7.
|
Clause 22.2 (
Leverage Ratio
) of the Facility Agreement shall be deleted and replaced as follows:
|
(a)
|
for the period from and including the financial quarter starting on 1 July 2015 until and including the financial quarter ending on 31 December 2016, 6.0:1;
|
(b)
|
for the period from and including the financial quarter starting on 1 January 2017 until and including the financial quarter ending on 30 June 2017, 6.5:1; and
|
(c)
|
for the period prior to 1 July 2015 and for the period from and including the earlier of (i) the financial quarter starting on 1 July 2017 and (ii) such earlier date on which the Parent (at its sole discretion) notifies the Agent of a reset of the Leverage Ratio covenant to 4.5:1 (the “
Reinstated Leverage Ratio Covenant Date
”) until the Final Maturity Date, 4.5:1.”
|
8.
|
Clause 24.1 (
Minimum Market Value
) of the Facility Agreement shall be deleted and replaced as follows:
|
9.
|
Clause 24.2 (
Market Valuation of the Rigs
) of the Facility Agreement shall be deleted and replaced as follows:
|
(a)
|
The Parent shall (at its own expense):
|
(i)
|
arrange for the Market Value of each of the Rigs to be determined and valued:
|
(A)
|
until the Compliance Certificate in respect of the period ending 30 June 2017 is due to be delivered to the Agent, in order for the same to be communicated to the Agent (but not for the purpose of determining any compliance with Clause 24.1
(Minimum Market Value
)) at the same time as each Compliance Certificate is delivered to the Agent pursuant to Clause 21.2 (
Compliance Certificate
) for the financial quarters ending 30 June and 31 December each year; and
|
(B)
|
once the Compliance Certificate in respect of the period ending 30 June 2017 is due to be delivered to the Agent, for the purpose of every Compliance Certificate to be delivered to the Agent pursuant to Clause 21.2 (
Compliance
|
|
15
|
|
(ii)
|
if an Event of Default has occurred and is continuing, upon the Agent’s request, arrange for the Market Value of each of the Rigs to be determined.
|
(b)
|
For the avoidance of doubt, there shall be no requirement for the Parent to provide the Market Value of each of the Rigs in any Compliance Certificate delivered to the Agent in respect of any testing period ending prior to 30 June 2017.”
|
10.
|
A new definition of “US Bankruptcy Code” and a new clause 25.18 (
Automatic Acceleration
) shall be incorporated into the Facility Agreement as follows:
|
11.
|
The opening paragraph of clause 25 (
Events of Default
) of the Facility Agreement shall be deleted and replaced as follows:
|
12.
|
Paragraph 1.1 (
Minimum Liquidity
) of schedule 5 (
Form of Compliance Certificate
) of the Facility Agreement shall be deleted and replaced as follows:
|
13.
|
Paragraph 1.2 (
Leverage Ratio
) of schedule 5 (
Form of Compliance Certificate
) of the Facility Agreement shall be deleted and replaced as follows:
|
14.
|
Paragraph 1.6 (
Market Value
) of schedule 5 (
Form of Compliance Certificate
) of the Facility Agreement shall be deleted and replaced as follows:
|
|
16
|
|
|
17
|
|
1.
|
Corporate Authorisations
|
(A)
|
Company certificate (or similar);
|
(A)
|
Articles of Association, Certificate of Incorporation and By-laws (or equivalent);
|
(B)
|
Updated Good Standing Certificate (or similar);
|
(C)
|
Resolutions passed at a board meeting of the Parent evidencing:
|
(i)
|
the approval of the terms of this letter; and
|
(ii)
|
the authorisation of its appropriate officer or officers or other representatives to execute this letter and any other documents necessary for the transactions contemplated by this letter, on its behalf;
|
(D)
|
Certified true copies of valid proof of identity in respect of the persons signing on behalf of the Parent; and
|
(E)
|
Officer’s certificate, including, but not limited to, certification of the relevant corporate documents, specimen signatures of each person signing on behalf of the Parent and confirmations on solvency.
|
(F)
|
Company certificate (or similar);
|
(G)
|
Articles of Association, Certificate of Incorporation and By-laws (or equivalent);
|
(H)
|
Certificate of continuing registration (or similar);
|
(I)
|
Board and shareholders resolution of the Hong Kong Obligor evidencing (i) the approval of the terms of, and the transactions contemplated by, this letter; and (ii) the authorisation of the Parent to execute this letter on its behalf; and
|
(J)
|
Officer’s certificate, including, but not limited to, certification of the relevant corporate documents and specimen signatures of each person signing on behalf of the Hong Kong Obligor.
|
(K)
|
Company certificate (or similar);
|
(L)
|
Articles of Association, Certificate of Incorporation and By-laws (or equivalent);
|
(M)
|
Board and shareholders resolutions of each Marshall Islands Obligor evidencing the approval of the terms of, and the transactions contemplated by, this letter, and the authorisation of the Parent to execute this letter;
|
(N)
|
A certificate of good standing issued by the Registrar of Corporations of the Republic of the Marshall Islands as to the good standing of each Marshall Islands Obligor; and
|
|
18
|
|
(O)
|
Officer’s certificate, including, but not limited to, certification of the relevant corporate documents and specimen signatures of each person signing on behalf of each Marshall Islands Obligor.
|
2.
|
Finance Documents
|
3.
|
Legal opinions
|
(A)
|
Executed legal opinion from English law counsel to the Lenders relating to English law matters in respect of this letter; and
|
(B)
|
Executed legal opinion from Bermudan law counsel to the Lenders relating to Bermudan law matters in respect of this letter and the Parent.
|
4.
|
Co-Com Appointment Documents
|
(C)
|
The letter of engagement of Advokatfirmaet BA-HR DA dated on or about the date hereof;
|
(D)
|
The fee reimbursement letter in connection with the letter of engagement of Advokatfirmaet BA-HR DA dated on or about the date hereof;
|
(E)
|
The letter of engagement of Lazard & Co., Limited dated on or about the date hereof;
|
(F)
|
The agreement with Lazard & Co., Limited appended to the letter of engagement of Lazard & Co, Limited dated on or about the date hereof; and
|
(G)
|
The letter of engagement of White & Case LLP dated on or about the date hereof.
|
|
19
|
|
(i)
|
5pm (CET) on 30 June 2017; and
|
(ii)
|
following the occurrence of a Deferral Date Event which is continuing, the time and date at which the Agent (acting on the instructions of the Required Lenders) issues a notice in writing to the Parent specifying the Deferral Date Event and stating that the Deferral Date has occurred and is continuing.
|
(i)
|
failure to meet any of the Milestones within the period relevant to that Milestone specified in paragraph 4(a) of this letter as the same is extended by the applicable grace period referred to in that paragraph and as the same may be amended by the Agent;
|
(ii)
|
breach of any of the Undertakings, provided that it shall not be a Deferral Date Event if such breach is capable of remedy and is remedied within 15 calendar days of such breach (except any breach of the Undertakings set out in paragraph 4(k));
|
(iii)
|
the occurrence of the final maturity date under any of the Group Facility Agreements as the same may be amended in accordance with the terms of the relevant Group Facility Agreement;
|
(iv)
|
any extension letter with respect to a Maturing Facility Agreement is terminated in accordance with its terms;
|
(v)
|
subject only to any applicable grace period provided under the respective finance documents in respect of any Financial Indebtedness of any member of the Group, any Event of Default occurs and is continuing or any other actual event of default or termination event (however described) occurs and is continuing in respect of any Financial Indebtedness of any member of the Group where the aggregate amount of any such Financial Indebtedness outstanding is equal to or more than USD25,000,000 (or its equivalent in other currencies); and
|
(vi)
|
the occurrence of any enforcement action by or on behalf of any creditor in respect of any Financial Indebtedness of any member of the Group where the aggregate amount of any such Financial Indebtedness is equal to or more than USD25,000,000 (or its equivalent in other currencies).
|
(i)
|
the Parent (for itself, as the Obligors’ agent pursuant to clause 2.4 (
Parent’s Authority
) of the Facility Agreement and as authorised signatory and/or attorney-in-fact for certain Obligors and/or security providers pursuant to powers of attorney) has acknowledged and agreed to the terms set out in this letter; and
|
|
20
|
|
(ii)
|
the Agent has given notification to the Parent and the Lenders under paragraph 3 of this letter; and
|
(iii)
|
amendments substantially equivalent to those set out in schedule 1 (
Amendments to the Facility Agreement
) to this letter have become effective in each of the other Group Facility Agreements, in each case ignoring for these purposes any condition to which those substantially equivalent amendments are subject relating solely to those substantially equivalent amendments becoming effective in relation to other Group Facility Agreements.
|
(i)
|
Financial Support existing on the Request Date provided, procured, created or permitted to subsist by any member of the Group to or for the benefit of any person other than a member of the Group or a member of the Minority Holding Group; and
|
(ii)
|
Financial Support (which shall be deemed to include for the purposes of this paragraph (ii) only any equity or similar investment, asset contribution or acquisition of shares or other equity investments) existing on the Request Date provided, procured, created or permitted to subsist by any member of the Group to or for the benefit of any member of the Minority Holding Group,
|
(i)
|
Seadrill Partners LLC; and
|
(ii)
|
Seadrill Partners Operating LLC.
|
(i)
|
Seadrill Partners LLC;
|
(ii)
|
Archer Limited;
|
|
21
|
|
(iii)
|
Seamex Ltd.;
|
(iv)
|
Seabras Sapura Participacoes Limitida;
|
(v)
|
Seabras Sapura Holding GmbH;
|
(vi)
|
Camburi Drilling BV;
|
(vii)
|
Itaunas Drilling BV;
|
(viii)
|
Sahy Drilling BV; and
|
(ix)
|
Sapurakencana Petroleum Berhad,
|
(i)
|
is made by a member of the Group from a member of the Group;
|
(ii)
|
arises pursuant to the provision of Permitted Financial Support (other than under paragraph (v) of the definition thereof);
|
(iii)
|
is the incorporation of a company with limited liability which on incorporation becomes a member of the Group or the acquisition of a shelf company having no material assets or liabilities at the time of acquisition;
|
(iv)
|
arises pursuant to the joint venture arrangements described in paragraph (iii) of the definition of Permitted Newbuild Contract Payments; or
|
(v)
|
arises pursuant to any legally binding obligation, commitment or arrangement existing on the Request Date.
|
(v)
|
of trading stock or cash made by any member of the Group in the ordinary course of business of the disposing entity and not otherwise restricted by the terms of this letter or the Facility Agreement;
|
(vi)
|
of any asset by a member of the Group to another member of the Group;
|
(vii)
|
of assets in exchange for other assets (other than drilling units or shares) comparable or superior as to type, value and quality;
|
(viii)
|
of obsolete or redundant vehicles, plant and equipment for cash;
|
(ix)
|
of cash equivalent investments for cash or in exchange for other cash equivalent investments;
|
|
22
|
|
(x)
|
subject to the prior consent of the Required Lenders and the Required Lenders, Required Majority or Majority Lenders (as therein defined) under each other Group Facility Agreement, of any Rig or “Drilling Unit”, “Drilling Rig”, “Drillship”, “Collateral Rig” or “Rig” (as such term is defined in any of the Group Facility Agreements) on terms which would not be prohibited (A) with respect to any Rig, under the Facility Agreement or, (B) with respect to any “Drilling Unit”, “Drilling Rig”, “Drillship”, “Collateral Rig” or “Rig”, under the Group Facility Agreement relating to the relevant “Drilling Unit”, “Drilling Rig”, “Drillship”, “Collateral Rig” or “Rig”;
|
(xi)
|
of the Rigel drilling vessel, rig or other drilling unit, or the shares in the joint venture company which may acquire the same (as described in paragraph (iii) of the definition of Permitted Newbuild Contract Payments) on arm’s length terms and for what the Parent acting reasonably considers to be fair market value or as otherwise required by the terms of the joint venture agreement;
|
(xii)
|
of any asset forming part of the capital equipment pool operated by Seadrill Global Services Limited to any member of the Minority Holding Group consistent with the normal basis on which this capital equipment pool has previously been operated;
|
(xiii)
|
the application of cash not otherwise prohibited by this letter or the Finance Documents;
|
(xiv)
|
the granting of any licence of intellectual property or lease or licence in each case in the ordinary course of trading;
|
(xv)
|
of shares in Sapurakencana Petroleum Berhad on arm’s length terms;
|
(xvi)
|
consented to by the Required Lenders; and
|
(xvii)
|
of assets for cash where the net consideration receivable (when aggregated with the net consideration receivable for any other sale, lease, licence, transfer or other disposal not allowed under the preceding paragraphs) does not exceed USD25,000,000 (or its equivalent in other currencies) in total during the Negotiation Period.
|
(i)
|
is Existing Financial Indebtedness;
|
(ii)
|
is or arises under or pursuant to any Permitted Financial Support (other than under paragraph (v) of the definition thereof);
|
(iii)
|
is owed by one member of the Group to another member of the Group;
|
(iv)
|
is or arises under any obligation in respect of Financial Indebtedness of one or more members of the Group which is assumed by or transferred or novated to another member of the Group;
|
(v)
|
is an amount of any liability under an advance or deferred purchase agreement if the agreement is in respect of the supply of assets or services in the ordinary course of trading;
|
(vi)
|
arises from the endorsement of negotiable instruments in the ordinary course of trading;
|
(vii)
|
arises from any netting, setting off, multi-account overdraft, group cash pool or group cash management arrangements existing as at the Request Date (as amended, varied or supplemented);
|
(viii)
|
arises under any derivative or hedging transaction entered into in the ordinary course of business and which is for hedging purposes and not of a speculative nature;
|
|
23
|
|
(ix)
|
is in the form of customer deposits and advance payments received in the ordinary course of trading from customers for services purchased in the ordinary course of trading;
|
(x)
|
arises from the honouring by a bank or other financial institution of a cheque, draft or similar instrument inadvertently drawn against insufficient funds in the ordinary course of trading (provided that such Financial Indebtedness is extinguished within ten Business Days);
|
(xi)
|
is consented to by the Required Lenders; or
|
(xii)
|
is not permitted by the preceding paragraphs and the outstanding principal amount of which does not exceed (A) for the period from the Request Date to and including the 30 September 2016 USD25,000,000 (or its equivalent in other currencies), and (B) for the period from 30 September 2016 USD50,000,000 (or its equivalent in other currencies) in each case in aggregate for the Group at any time.
|
(i)
|
the Existing Financial Support Arrangements, subject to paragraph 4(k) of this letter;
|
(ii)
|
any Financial Support which is provided, procured, created or permitted to subsist by any member of the Group to another member of the Group;
|
(iii)
|
any Financial Support which is provided, procured, created or permitted to subsist in the ordinary course of business in respect of the performance by a member of the Group of its obligations under any contract, agreement, deed, law, regulation or other legally binding arrangement (other than obligations which constitute Financial Indebtedness);
|
(iv)
|
any Financial Support which is provided, procured, created or permitted to subsist in respect of the netting or set-off of debit and credit balances of members of the Group (including as part of multi-account overdraft, group cash pool or group cash management arrangements) constituting Permitted Security;
|
(v)
|
Financial Support constituting Permitted Financial Indebtedness (other than under paragraph (ii) of the definition thereof) or a Permitted Acquisition (other than under paragraph (ii) of the definition thereof);
|
(vi)
|
any Financial Support which is provided, procured, created or permitted to subsist in the ordinary course of trading of any member of the Group;
|
(vii)
|
any Financial Support consented to by the Required Lenders;
|
(viii)
|
subject to paragraph 4(k) of this letter, any Financial Support (which shall be deemed to include for the purposes of this sub-paragraph (viii) only any equity or similar investment, asset contribution or acquisition of shares or other equity investments) which is provided, procured, created or permitted to subsist by any member of the Group to or for the benefit of Seamex Ltd. and/or any of Seamex Ltd.’s Subsidiaries (including by the extension of the availability of Existing Financial Support Arrangements) in an aggregate amount at any time not exceeding by more than USD101,000,000 (or its equivalent in other currencies) the aggregate amount of Existing Financial Support Arrangements to or for the benefit of Seamex Ltd. or Seamex Ltd.’s Subsidiaries as at the Request Date;
|
(ix)
|
subject to paragraph 4(k) of this letter, Financial Support which is provided, procured, created or permitted to subsist in connection with the replacement, refinancing, amendment, extension or (in the case of the Rubi Guarantees, as defined below) issuance of bank guarantees and letters of credit, including (A) the irrevocable standby letter of credit issued by Nordea Bank AB in support of the obligations of Sapura Onix GmbH in an amount of USD 7,531,358 dated 17 April 2015, (B) the irrevocable standby letter of
|
|
24
|
|
(x)
|
Financial Support not permitted by the preceding paragraphs and the outstanding amount of which does not exceed USD25,000,000 (or its equivalent in other currencies) in aggregate for the Group at any time.
|
(i)
|
any payments in respect of stacking costs;
|
(ii)
|
any payments to delay delivery provided that the Parent uses its reasonable endeavours to keep these to a minimum taking into account the Group’s exposure under the relevant Newbuild Contract and related Newbuild Contracts;
|
(iii)
|
any costs and expenses in respect of Newbuild Contracts between (1) the Dalian Shipbuilding Industry Offshore Co Ltd and any of Seadrill Titan Ltd, Seadrill Proteus Ltd, Seadrill Rhea Ltd, Seadrill Tethys Ltd, Seadrill Hyperion Ltd, Seadrill Umbriel Ltd, Seadrill Dione Ltd or Seadrill Mimas Ltd, or (2) the Jurong Shipyard Pte Ltd and North Atlantic Rigel Ltd in each case provided that such costs and expenses relate to the entering into of a joint venture agreement between the relevant entity and Dalian Shipbuilding Industry Offshore Co Ltd (or associated person thereof) or Jurong Shipyard Pte Ltd (or associated person thereof), as applicable with respect to the relevant drilling vessel, rig or other drilling unit and not, for the avoidance of doubt, the payment of any additional or final instalments with respect to such Newbuild Contracts;
|
(iv)
|
subject to paragraph 4(k) of this letter, any payment made pursuant to any legally binding contractual term of any Newbuild Contract existing as at the Request Date; and
|
(v)
|
any payment consented to by the Required Lenders.
|
(i)
|
any Existing Security;
|
(ii)
|
any rights of set-off arising in respect of any member of the Group in the ordinary course of its trading and not securing Financial Indebtedness;
|
(iii)
|
any lien arising by operation of law and in the ordinary course of business and not as a result of any default or omission by any member of the Group;
|
|
25
|
|
(iv)
|
any Security Interest arising in connection with any unpaid Tax where the liability to pay such Tax is being contested in good faith by appropriate proceedings;
|
(v)
|
any Security Interest arising under any court order or injunction or for costs arising in connection with any litigation or court proceedings being contested by any member of the Group in good faith;
|
(vi)
|
any netting or set-off arrangement entered into by any member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances of members of the Group (including as part of any multi-account overdraft, group cash pool or group cash management arrangements);
|
(vii)
|
any payment or close out netting or set-off arrangement pursuant to any derivative or hedging transaction entered into by any member of the Group which constitutes Permitted Financial Indebtedness;
|
(viii)
|
any collateral provided on customary market terms in respect of any member of the Group’s obligations under any derivative or hedging transaction which constitutes Permitted Financial Indebtedness entered into after the Request Date the amount of which does not exceed USD 25,000,000 (or its equivalent in any other currency or currencies) at any time;
|
(ix)
|
any Security Interest arising under any retention of title, hire purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied to any member of the Group in the ordinary course of business and on the supplier’s standard or usual terms and not arising as a result of any default or omission by any member of the Group;
|
(x)
|
any Permitted Encumbrance permitted to subsist or arise under the Facility Agreement, or “Permitted Encumbrance” permitted to subsist or arise under or pursuant to and as such term is defined in any of the Group Facility Agreements, provided that such Permitted Encumbrance or “Permitted Encumbrance” is permitted to subsist or arise pursuant to the terms of the Facility Agreement or relevant Group Facility Agreement (as applicable) over an asset owned immediately prior to the creation of the relevant Security Interest by an Obligor (other than the Parent) under the Facility Agreement or an “Obligor” (other than the Parent) under the terms of the relevant Group Facility Agreement;
|
(xi)
|
any Security Interest which is consented to by the Required Lenders; and
|
(xii)
|
any Security Interest securing indebtedness the outstanding principal amount of which (when aggregated with the outstanding principal amount of any other indebtedness which has the benefit of any Security Interest given by any member of the Group other than any permitted under the paragraphs above) does not exceed USD25,000,000 (or its equivalent in other currencies) at any time.
|
|
26
|
|
|
27
|
|
(a)
|
if the Leverage Ratio is from 4.50:1 up to and including 4.99:1; 0.125 per cent per annum;
|
(b)
|
if the Leverage Ratio is from and including 5.00:1 up to and including 5.49:1; 0.250 per cent per annum;
|
(c)
|
if the Leverage Ratio is from and including 5.50:1 up to and including 6.00:1; 0,750 per cent per annum,
|
(a)
|
3.0 per cent per annum; and
|
(b)
|
from and including 1 July 2015 until the Reinstated Leverage Ratio Covenant Date, the Step-up Margin (if applicable)”
|
(a)
|
3.0 per cent per annum; and
|
(b)
|
from and including 1 July 2015 until the Reinstated Leverage Ratio Covenant Date, the Step-up Margin (if applicable)”
|
(a)
|
from and including the financial quarter starting on 1 July 2015 until and including the financial quarter ending on 30 September 2016; 6.0:1;
|
(b)
|
from and including the financial quarter starting on 1 October 2016 until and including the financial quarter ending on 31 December 2016; 5.5:1; and
|
(c)
|
from and including the earlier of (i) the financial quarter starting on 1 January 2017 or (ii) such earlier date on which the Borrower (at its discretion) notifies the Agent of a reset of the Leverage Ratio covenant to 4.5:1, (the “
Reinstated Leverage Ratio Covenant Date
”) until the Final Maturity Date; 4.5:1.”
|
1.
|
The acknowledgement by the Parent of the terms set out in this Consent Letter.
|
2.
|
Evidence of K-Sure’s and GIEK’s acceptance of the terms of this consent letter, in a form satisfactory to the Agent.
|
3.
|
No other lenders and/ or other financial institutions in any other facilities are granted higher compensation or more favourable terms than what is granted to the Finance Parties in the Consent Letter.
|
4.
|
The Parent’s undertaking to the Agent on behalf of the Finance Parties, which shall be considered given by its acceptance of this Consent Letter, that from and including 1 July 2015 and until the Reinstated Leverage Ratio Covenant Date the Parent shall, irrespective of any term of the Finance Documents to the contrary, not make any dividend payments, enter into new total return swaps (for the avoidance of doubt, excluding roll-over of existing total return swaps) or enter into similar transactions with similar effect or buy back any shares.
|
The Agent (on behalf of the Required Lenders):
|
|
ING Bank N.V.
|
By:
/s/ K.A. van Coblijn
|
Name: K.A. van Coblijn
|
Title: Managing Director
|
|
The Parent (on behalf of itself and as the Obligors’ agent pursuant to Clause 2.3 (
Parent’s Authority
) of the Loan Agreement:
|
|
Seadrill Limited
|
By:
/s/ Jonas Ytreland
|
Name: Jonas Ytreland
|
Title: VP Treasury and Financing
Seadrill Management Ltd
|
|
To:
|
Seadrill Limited
c/o Seadrill Management Ltd.
2 nd Floor, Building 11, Chiswick Business Park 566 Chiswick High Road London W4 5YS United Kingdom |
1.
|
CONSENT
|
2.
|
AMENDMENTS TO THE FACILITY AGREEMENT
|
(a)
|
On the Effective Date, the amendments to the Facility Agreement set out in schedule 1 (
Amendments to the Facility Agreement
) to this letter will be made to the Facility Agreement to reflect the consent of the Agent (on behalf of the Required Lenders) to the Amendment Request in accordance with paragraph 1 above.
|
(b)
|
For the avoidance of doubt, clause 8.3 (
Minimum Market Value
) of the Facility Agreement will not apply whilst the minimum Market Value covenant in clause 24.1 (
Minimum Market Value
) of the Facility Agreement is suspended.
|
(c)
|
The amendments to the Facility Agreement in schedule 1 (Amendments to the Facility Agreement) to this letter (other than paragraphs 2, 3, 5, 6, 10, 11 and 12 of schedule 1) and the Agent’s confirmation in paragraph 5 below shall only be effective until the Deferral Date, on which date such amendments will be reversed, such confirmation shall cease to have effect and the rights and remedies available to the Lenders prior to the making of such amendments and such confirmation shall be reinstated in full.
|
3.
|
CONDITIONS PRECEDENT & CONDITIONS SUBSEQUENT
|
(a)
|
The Parent shall deliver, or procure the delivery, to the Agent, substantially in a form and substance which has been agreed with the Agent in writing on or prior to the date of this letter or otherwise in a form and substance satisfactory to the Agent:
|
(i)
|
all of the documents and evidence listed in part 1 (
Conditions Precedent
) of schedule 2 to this letter; and
|
(ii)
|
within 14 Business Days from the Effective Date, all of the documents and evidence listed in part 2 (
Conditions Subsequent
) of schedule 2 to this letter.
|
(b)
|
The Parent shall use reasonable endeavours to deliver, or procure the delivery, to the Agent, substantially in a form and substance agreed with the Agent in writing on or prior to the date of this letter or otherwise in a form and substance satisfactory to the Agent within six weeks of the Effective Date, all of the documents and evidence listed in part 3 (
Additional Conditions Subsequent
) of schedule 2 to this letter.
|
(c)
|
The Agent shall notify the Parent and the Lenders promptly after each of the conditions listed in paragraph 3(a)(i) (Conditions Precedent) above have been satisfied.
|
(d)
|
The Agent shall notify the Parent and the Lenders promptly after each of the conditions listed in paragraph 3(a)(ii) (Conditions Subsequent) above have been satisfied and promptly after each of the conditions listed in paragraph 3(b) (Additional Conditions Subsequent) above have been satisfied.
|
4.
|
PARENT’S UNDERTAKINGS
|
(a)
|
it shall:
|
(i)
|
by no later than 16 May 2016 provide to the Co-Com and Co-Com Advisors an indicative legal analysis prepared by the Parent and its advisors for contingency planning purposes including without limitation in respect of (1) the potential use of an English and/or local law scheme of arrangement to implement a non-consensual restructuring, (2) the potential use of a US Chapter 11 plan of reorganisation to implement a non-consensual restructuring, and (3) the potential legal impact on the Parent of a change in governing law, in each case with respect to the Group Facility Agreements and any other instrument relating to Financial Indebtedness of any member of the Group;
|
|
2
|
|
(ii)
|
by no later than 16 May 2016, present to the Co-Com and the Co-Com Advisors its proposals for the recapitalisation of the Group broadly consistent with the proposals presented by the Parent to the Co-Com at the meeting between the Parent and the Co-Com on 10 March 2016 and showing sustainability of funding through 2020, accompanied by an updated financial model with assumptions based on updated feedback from Fearnleys and in respect of cost items assumptions based on any guidance provided by the Parent to the capital markets;
|
(iii)
|
by no later than 30 June 2016, present to the lenders and each of the facility agents under the Group Facility Agreements for approval amendment and extension requests setting out its proposals for the recapitalisation of the Group showing sustainability of funding through 2020 (taking into account input from the Co-Com and the Co-Com Advisors);
|
(iv)
|
at any time after the presentation of amendment and extension requests for approval pursuant to paragraph (iii) above and by no later than 1 September 2016, if requested by the Co-Com on not less than 10 calendar days’ prior notice, on a single occasion, host a meeting for the Co-Com (and, if requested by the Co-Com, all lenders under the Group Facility Agreements) at which the Parent will present an update on the status of its plans for and developments in relation to the restructuring of the bonds and notes issued by the Parent and other members of the Group including without limitation principal and coupon amounts payable thereunder and an update on its proposal for the recapitalisation of the Group; and
|
(v)
|
use reasonable endeavours to ensure that by no later than 31 December 2016 and otherwise to ensure that by no later than 30 April 2017, the amendments contemplated in the amendment and extension requests presented for approval pursuant to paragraph (iii) above have become effective and its proposed recapitalisation of the Group has been implemented on terms satisfactory to the Required Lenders,
|
(A)
|
each of the dates given in the Milestones above (other than the Milestones set out in paragraphs (iv) and (v) above for which no grace period applies) is subject to a grace period of 15 calendar days, or 30 calendar days in respect of the Milestone set out in paragraph (iii) above; and
|
(B)
|
each Milestone, on a single occasion only, may be varied at the written request of the Parent with the consent of the Agent in its sole discretion if the request relates to a further delay of 15 calendar days beyond either the due date or (if applicable) the end of the grace period referred to in (A) above. Other than to the extent that the Required Lenders notify the Agent in writing to the contrary before the Agent gives such a consent, the Required Lenders are by their approval of this letter deemed to have authorised (but not required) the Agent to give that consent. The Agent confirms that it has considered whether it is able to consent to such a delay without requiring instructions from the Required Lenders in addition to the terms of this letter and has satisfied itself that it is able to do so. The Agent shall not be liable for any damages, costs or losses whatsoever as a result of giving any such consent;
|
|
3
|
|
(b)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period incur or allow to remain outstanding any Financial Indebtedness other than Permitted Financial Indebtedness;
|
(c)
|
during the Negotiation Period, it shall not, irrespective of any term of the Finance Documents to the contrary:
|
(i)
|
make any dividend payments or other distributions in respect of its share capital to its shareholders;
|
(ii)
|
enter into new total return swaps (for the avoidance of doubt, excluding roll-over or unwinding, in whole or in part, of existing total return swaps (which roll-over or unwinding will include the purchase of shares and corresponding reduction of any such existing total return swap)) or enter into similar transactions with similar effect; or
|
(iii)
|
buy back or redeem any shares in its capital,
|
(d)
|
during the Negotiation Period, it shall not (and it shall procure that no other member of the Group shall) prepay, repay, purchase or otherwise acquire, in each case voluntarily, any loans under any of the Group Facility Agreements (provided that it shall not be prohibited from taking any action with respect to Financial Indebtedness as described in sub-paragraph (iv) of the definition of Permitted Financial Indebtedness);
|
(e)
|
during the Negotiation Period, it shall not (and it shall procure that no other member of the Group shall) buy back or redeem, in each case voluntarily, any bonds or notes issued by it;
|
(f)
|
during the Negotiation Period, it shall not (and it shall procure that no other member of the Group shall) voluntarily close out any hedging or derivative transaction entered into with any person who is not a member of the Group except for the voluntary closing out of hedging or derivative transactions (A) where the Group is over-hedged and only the over-hedged position is being closed out or (B) where the same does not crystallise cash outflows for members of the Group during the Negotiation Period other than scheduled payments in the ordinary course under the terms of the restructured hedging or derivative transaction and so that any negative values are baked into the rates agreed as part of the restructuring;
|
(g)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period acquire a company or any shares or a business or undertaking (or, in each case, any interest in any of them) or make any equity injections or contributions in each case except for Permitted Acquisitions;
|
(h)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset other than as part of a Permitted Disposal;
|
|
4
|
|
(i)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period make any payment to any person who is not a member of the Group under any Newbuild Contract, other than any Permitted Newbuild Contract Payments;
|
(j)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period provide, procure, create or permit to subsist any Financial Support other than any Permitted Financial Support;
|
(k)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period:
|
(i)
|
make any payment pursuant to any Newbuild Contract existing as at the Request Date (other than payments falling within paragraphs (i) to (iii) or (v) of the definition of Permitted Newbuild Contract Payments);
|
(ii)
|
make any payment to, or for the benefit of, any member of the Minority Holding Group:
|
(1)
|
under any Existing Financial Support Arrangements provided, procured, created or permitted to subsist to or for the benefit of such member of the Minority Holding Group (including, without limitation, any Financial Support provided with respect to the financial indebtedness of Archer Limited and its Subsidiaries from time to time, including under the equity undertaking originally dated 22 December 2015 between the Parent, Archer Limited and Danske Bank A/S (the “
Archer Equity Undertaking
”)); or
|
(2)
|
in respect of any Financial Support provided, procured, created or permitted to subsist by any member of the Group to or for the benefit of Seamex Ltd. and/or any of Seamex Ltd.’s Subsidiaries; or
|
(3)
|
in respect of any Financial Support which is provided, procured, created or permitted to subsist in connection with the replacement, refinancing, amendment or extension (or in the case of the Rubi Guarantees, issuance) of bank guarantees and letters of credit with a maturity date falling within the Negotiation Period,
|
(A)
|
in advance of making any such Cash Leakage Payment, the Parent shall, with appropriate legal advice, consider the rights and obligations of the relevant parties with respect to such Cash Leakage Payment to determine whether that Cash Leakage Payment can be legally reduced, postponed, cancelled or otherwise avoided under the terms of the agreement under which the requirement to make that Cash Leakage Payment arises or any related agreements, in each case without materially and adversely affecting the interests of the Group and its financial creditors;
|
(B)
|
if the Parent determines acting reasonably that the Cash Leakage Payment can be so reduced, postponed, cancelled or otherwise avoided, the Parent shall use its reasonable endeavours to achieve the same;
|
|
5
|
|
(C)
|
if the Parent determines acting reasonably that the Cash Leakage Payment cannot be so reduced, postponed, cancelled or otherwise avoided, unless the Parent acting reasonably considers that to do so would not be in the interests of the Group and its financial creditors (because for example, but without limitation, the same risks resulting in additional amounts being claimed from members of the Group) the Parent shall:
|
(1)
|
use its reasonable endeavours to engage with the relevant payee (or such other party whose consent may be required) to negotiate in good faith a consensual reduction, postponement, cancellation or other avoidance of the Cash Leakage Payment;
|
(2)
|
promptly provide the Co-Com with details of any proposal made by the Parent to the relevant payee (including, without limitation, with respect to the negotiation in respect of the Archer Equity Undertaking); and
|
(3)
|
keep the Co-Com updated as to any material developments with respect to such negotiation and provide the Co-Com with all information as the Co-Com may reasonably request in respect of such negotiations; and
|
(D)
|
the Parent shall give the Co-Com notice as soon as reasonably practicable on becoming aware that it has become obliged, or is likely to become obliged within a period of 30 calendar days, to make a Cash Leakage Payment, and shall provide the Co-Com with all information as the Co-Com may reasonably request and which the Parent is legally permitted to provide with respect to that Cash Leakage Payment and its circumstances,
|
(l)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period create or permit to subsist any Security Interest over any of its assets other than Permitted Security;
|
(m)
|
it shall not, and shall procure that no other member of the Group shall, during the Negotiation Period enter into any agreement in respect of the extension of the final maturity date under any Maturing Facility Agreement other than (A) on terms satisfactory to the Required Lenders and the Required Lenders, Required Majority or Majority Lenders (as therein defined) under each other Group Facility Agreement or (B) any agreement entered into pursuant to the extension
|
|
6
|
|
(n)
|
it shall not, and shall procure that no other member of the Group shall, during the Negotiation Period agree to amendments to any of the other Group Facility Agreements or any other instrument relating to Financial Indebtedness of any member of the Group (provided that this provision shall apply only to amendments to any of the Group Facility Agreements, any of the Ship Finance Arrangements or any hedging agreement entered into by any Group member except in respect of amendments to economics) on more favourable terms in any material respect than are provided with respect to the Facility Agreement or, with respect to an extension of tenor, the Maturing Facility Agreements other than any amendments (A) contemplated by the proposals for the recapitalisation of the Group described in paragraphs (a)(ii) and (a)(iii) above, (B) arising from the extension of the Maturing Facility Agreements on the basis agreed with the Required Lenders or any agreement entered into pursuant to the extension approval letters dated on or about the date of this letter or (C) in the case of amendments to economics of any instrument relating to Financial Indebtedness of the Group (other than any of the Group Facility Agreements, any of the Ship Finance Arrangements or any hedging agreement) entered into by any Group member, resulting in an aggregate cost to the Group under this paragraph 4(n) and under paragraph 4(o) below not exceeding USD25,000,000 (or its equivalent in other currencies);
|
(o)
|
during the Negotiation Period, if any member of the Group agrees to pay higher compensation relative to the Facility Agreement or, with respect to an extension, the Maturing Facility Agreements (whether in the form of margin increases, consent fees or otherwise), save as (A) contemplated by the proposals for the recapitalisation of the Group described in paragraphs (a)(ii) and (a)(iii) above or (B) arising from the extension of the Maturing Facility Agreements on the basis agreed with the Required Lenders) or any agreement entered into pursuant to the extension approval letters relating to the Maturing Facility Agreements dated on or about the date of this letter to secure amendments in any of the other Group Facility Agreements or any other instrument relating to Financial Indebtedness of any member of the Group, it will procure that the terms of the Facility Agreement are amended to reflect this higher compensation and will enter into, or procure that such other member of the Group enters into, such documents as the Agent may reasonably require in order to reflect such higher compensation, save to the extent that the aggregate cost to the Group under this paragraph 4(o) and under paragraph 4(n) above does not exceed USD25,000,000 (or its equivalent in other currencies);
|
(p)
|
during the Negotiation Period it shall cooperate in good faith with the finance parties under the Group Facility Agreements for the appointment of (i) a financial advisor for them (the “Financial Advisor”), (ii) a coordinating committee of them (the “
Co-Com
”) and (iii) Norwegian and international counsel for them (together with the Financial Advisor, the “
Co-Com Advisors
”), in each case as soon as reasonably practicable and on terms (including as to the scope of the Financial Advisor’s work) to be agreed (acting reasonably);
|
(q)
|
it shall reimburse the agents, lenders and export credit agencies under the Group Facility Agreements for the properly incurred and documented fees of the Co-Com and the Co-Com Advisors in connection with the recapitalisation of the Group incurred in accordance with the terms and scope of work agreed in the engagement letters relating to the appointment of the Co-Com and the Co-Com Advisors agreed by the Parent;
|
|
7
|
|
(r)
|
it shall in good faith consider the requirements of the Co-Com in framing the proposal for the recapitalisation of the Group;
|
(s)
|
during the Negotiation Period it shall co-operate with the Co-Com Advisors and, subject to paragraph (v)(ii), provide them with information relating to the Group reasonably requested by them, in the case of the Financial Advisor consistent with the agreed scope of work;
|
(t)
|
during the Negotiation Period it shall provide the Co-Com with regular updates on the status of its plans for and developments in relation to the bonds and notes issued by the Parent and of its proposal for the recapitalisation of the Group;
|
(u)
|
during the Negotiation Period it shall:
|
(i)
|
use its reasonable endeavours to cooperate with the Co-Com and Co-Com Advisors in relation to contingency planning in case a consensual restructuring is not achievable, subject always to the fiduciary and other duties of the boards of directors of the Parent and other members of the Group; and
|
(ii)
|
make such senior management or officers of the Parent, and each other member of the Group, as the Co-Com may reasonably request, available to provide reasonable assistance in all matters of reasonable significance in relation to the implementation of the recapitalisation of the Group, at such times as the Co-Com may reasonably request after giving reasonable notice; and
|
(iii)
|
subject to paragraph (v)(ii), provide the Co-Com with all information in respect of, and access to, the business of the Group reasonably requested by the Co-Com to complete any due diligence in relation to the recapitalisation proposal as soon as reasonably practicable;
|
(i)
|
subject to paragraph (ii) below, it shall (and shall ensure that each member of the Group shall) during the Negotiation Period upon reasonable notice, supply the Co-Com with such information in relation to the Group as is available to it or any member of the Group as the Co-Com may reasonably require in connection with the restructuring of the Group’s debt;
|
(ii)
|
notwithstanding any provision in the Finance Documents to the contrary, neither it nor any member of the Group shall be required to provide any information which is either (A) subject to a duty of confidentiality owed to a third party, (B) of a highly commercially sensitive nature, or (C) legally privileged provided that should the Parent decline to provide any information to the Co-Com in reliance on paragraph (A), (B) or (C) the Parent shall provide such information to the Co-Com Advisors only in the case of paragraph (B), and in each case shall inform the Co-Com of the basis for refusal to provide the information to the CoCom and shall at the request of the Co-Com comply with paragraph (iii) below; and
|
(iii)
|
it shall, at the request of the Co-Com, either (A) seek the consent of any party to whom it owes a duty of confidentiality with respect to the information (provided that it shall not be required to seek consent where the Parent reasonably considers that to do so would be commercially damaging) or (B) consider in conjunction with its advisers whether the
|
|
8
|
|
(w)
|
during the Negotiation Period it shall provide the Co-Com with a monthly information update in the format agreed with the Co-Com prior to the date of this letter and derived from the Group’s existing management reporting, which shall include:
|
(i)
|
latest cash flow information;
|
(ii)
|
an update on material trade creditors and trade debtors of the Group;
|
(iii)
|
an update on the planned maintenance and docking of the rigs and on progress with respect to new builds and new build contracts;
|
(iv)
|
an update on material changes in liabilities owed between members of the Group;
|
(v)
|
an update on swaps and/or other derivative transactions entered into by any member of the Group;
|
(vi)
|
an update on material changes in the contracts portfolio of the Group including any material contract renewals, cancellations, dayrate amendments or other re-negotiations;
|
(vii)
|
to the extent such undrawn commitments are available, details of any anticipated need for a member of the Group to utilise any undrawn commitments under any of the Group Facility Agreements in the next 90 days;
|
(viii)
|
an update on steps taken by the Parent and other members of the Group to procure and maximise payments from each member of the Minority Holding Group to the Group;
|
(ix)
|
an update on steps taken by the Parent and other members of the Group in accordance with paragraph 4(k) above including (subject to paragraph (v)(ii)) a summary or details (on a non-reliance basis) of advice obtained by the Parent or other relevant member of the Group with respect to the rights and obligations of the relevant parties with respect to any relevant Cash Leakage Payment;
|
(x)
|
an update on the aggregate amount of Financial Support which has been provided, procured, created or permitted to subsist by any member of the Group in connection with the replacement, refinancing, amendment, extension or (in the case of the Rubi Guarantees) issuance of bank guarantees and letters of credit and the forecasted reduction of such Financial Support during the Negotiation Period; and
|
(xi)
|
an updated assessment of potential cash leakage from the Group in the next 12 months pursuant to the Financial Support provided, procured, created or permitted to subsist to or for the benefit of any member of the Minority Holding Group and demands which may be made in respect of such Financial Support;
|
|
9
|
|
(x)
|
during the Negotiation Period, to the extent such undrawn commitments are available, it shall provide the Co-Com with not less than 15 calendar days’ notice of any anticipated utilisation by any member of the Group of undrawn commitments under any of the Group Facility Agreements; and
|
(y)
|
during the Negotiation Period it shall promptly notify the Co-Com of the occurrence of any of the matters described in paragraph 6(e) below and of the occurrence of any Deferral Date Event.
|
5.
|
AGENT’S CONFIRMATION
|
6.
|
AGREEMENT BY OBLIGORS & BRAZILIAN SECURITY PROVIDER
|
(a)
|
The Parent by its signature of this letter (for itself, as the Obligors’ agent pursuant to clause 2.3 (
Parent’s Authority
) of the Facility Agreement and as authorised signatory and/or attorney-in-fact for certain Obligors and/or security providers pursuant to powers of attorney) agrees and acknowledges that the guarantees and indemnities contained in the Facility Agreement and/or each other Finance Document to which it or any other Obligor is a party shall, on and after the Effective Date, continue in full force and effect and extend to the liabilities and obligations of each of the Obligors and the Brazilian Security Provider under the Facility Agreement and the other Finance Documents (as amended and/or amended and restated from time to time) including as varied, amended, supplemented or extended by this letter.
|
(b)
|
The Parent by its signature of this letter (for itself, as the Obligors’ agent pursuant to clause 2.3 (
Parent’s Authority
) of the Facility Agreement and as authorised signatory and/or attorney-in-fact for certain Obligors and/or security providers pursuant to powers of attorney) agrees and acknowledges that, on and after the Effective Date:
|
(i)
|
the obligations of the Brazilian Security Provider, the Parent and each other Obligor arising under the Facility Agreement and/or each other Finance Document to which it or any other Obligor is a party constitute secured obligations (howsoever defined); and
|
(ii)
|
the Security Interests created by the Brazilian Security Provider, the Parent and each other Obligor under any Security Document:
|
(A)
|
continue in full force and effect; and
|
(B)
|
extend to the obligations of the Obligors and the Brazilian Security Provider under the Facility Agreement and/or the other Finance Documents (as amended and/or amended and restated from time to time) including as varied, amended, supplemented or extended by this letter, in each case subject to the limitations set out in the Security Documents.
|
(c)
|
The Parent by its signature of this letter, in its capacity as Parent, confirms that any Security Interest created pursuant to the Finance Documents by any party thereto shall, on and after the
|
|
10
|
|
(d)
|
The Parent (for itself, as the Obligors’ agent pursuant to clause 2.3 (
Parent’s Authority
) of the Facility Agreement and as authorised signatory and/or attorney-in-fact for certain Obligors and/or security providers pursuant to powers of attorney) shall at the request of the Agent and at its own expense, do all such acts and things reasonably necessary or desirable to give effect to the amendments effected or to be effected pursuant to this letter.
|
(e)
|
The Parent by its signature of this letter agrees that during the Negotiation Period:
|
(i)
|
the occurrence of the final maturity date under any Group Facility Agreement (as the same may be amended in accordance with the terms of that Group Facility Agreement) or an acceleration event under any Group Facility Agreement;
|
(ii)
|
an acceleration event in respect of any Financial Support provided, procured, created or permitted to subsist to or for the benefit of any member of the Minority Holding Group where the aggregate amount of such Financial Support exceeds USD50,000,000 (or its equivalent in other currencies); or
|
(iii)
|
failure to meet any of the Milestones within the period relevant to that Milestone specified in paragraph 4(a) of this letter as the same is extended by the applicable grace period referred to in that paragraph and as the same may be amended by the Agent; or
|
(iv)
|
breach of any of the Undertakings, in each case unless such breach is capable of remedy and is remedied within 15 calendar days of such breach (other than any breach of the Undertakings set out in paragraphs 3(a)(ii), 3(b) and 4(k)),
|
7.
|
FEES, COSTS, DISBURSEMENTS AND OTHER AMOUNTS
|
(a)
|
The Parent shall pay to GIEK, K-Sure, KEXIM and each Commercial Lender, for the account of GIEK, K-Sure, KEXIM and each Commercial Lender who has agreed to the terms of the Amendment Request subject to the terms and conditions set out herein and informed the Agent thereof, a fee of 10 basis points calculated on the outstanding amount of the GIEK Guarantees and the K-Sure Insurance Policies, the available and outstanding KEXIM Commitment and that Commercial Lender’s available and outstanding Commitment, respectively. No consent fee will be paid to the Lenders who are funding their Commitment on the back of the GIEK Guarantees or the K-Sure Insurance Policies (being the GIEK Lender and the K-Sure Lenders).
|
(b)
|
The fee set out in paragraph (a) above, together with any fees, costs, disbursements or other amounts (and any VAT thereon) invoiced on or prior to the Effective Date (it being understood
|
|
11
|
|
8.
|
LENDERS’ RIGHTS
|
9.
|
CONTINUING AGREEMENT AND FINANCE DOCUMENT
|
(a)
|
Except as expressly consented to pursuant to this letter, the provisions of the Finance Documents including the Facility Agreement and Security Documents shall continue in full force and effect. The consent granted in this letter does not extend to any matter other than expressly set out in this letter.
|
(b)
|
The Agent and the Parent designate this letter a “Finance Document” for the purposes of the Facility Agreement.
|
(c)
|
The provisions of clauses 1.2 (
Construction
), and 32 (
Notices
) of the Facility Agreement apply to this letter as though they were set out in full in this letter except that references to the Facility Agreement are to be construed as references to this letter.
|
(d)
|
This letter may be executed in counterparts each of which, when taken together, shall constitute one and the same agreement.
|
(e)
|
This letter and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with Norwegian law. Any disputes resulting from this letter will be resolved in accordance with the terms of the Facility Agreement applicable to dispute resolution. These terms are incorporated into this letter by reference as if set out in full in this letter.
|
|
12
|
|
|
13
|
|
1.
|
The definition of “Equity” in clause 1.1 (
Definitions
) of the Facility Agreement shall be deleted and replaced as follows:
|
2.
|
If each of the Maturing Facility Agreements is extended pursuant to extension approval letters dated on or about the date of this letter, the definition of “Minimum Liquidity” in clause 1.1 (
Definitions
) of the Facility Agreement shall be deleted and replaced as follows:
|
3.
|
The definition of “Step-up Margin” in clause 1.1 (
Definitions
) of the Facility Agreement shall be deleted and replaced as follows:
|
(a)
|
if the Leverage Ratio is from and including 4.50:1 up to and including 4.99:1, 0.125 per cent per annum;
|
(b)
|
if the Leverage Ratio is from and including 5:00:1 up to and including 5.49:1, 0.250 per cent per annum;
|
(c)
|
if the Leverage Ratio is from and including 5.50:1 up to and including 5.99:1, 0.750 per cent per annum; and
|
(d)
|
if the Leverage Ratio is equal to or in excess of 6:00:1, 1.500 per cent per annum,
|
4.
|
The definition of “Total Assets” in clause 1.1 (
Definitions
) of the Facility Agreement shall be deleted and replaced as follows:
|
5.
|
Paragraph (b) of clause 21.4 (
Information – Miscellaneous
) of the Facility Agreement shall be deleted and replaced as follows:
|
(i)
|
any breach of material contracts (including rig building contracts and charter contracts) or any material litigation, judgment, order, injunction, restraint, arbitration or administrative proceedings which is current, threatened, alleged or pending against any of the Obligors, Seadrill Serviços de Petróleo Ltda or any member of the Group; and
|
|
14
|
|
(ii)
|
any changes to the senior management of (A) the Parent or (B) any member of the Group where the change of senior management concerned is of material significance to the Group as a whole;”
|
6.
|
Clause 22.1 (
Minimum Liquidity
) of the Facility Agreement shall be deleted and replaced as follows:
|
7.
|
Clause 22.2 (
Leverage Ratio
) of the Facility Agreement shall be deleted and replaced as follows:
|
(a)
|
for the period from and including the financial quarter starting on 1 July 2015 until and including the financial quarter ending on 31 December 2016, 6.0:1;
|
(b)
|
for the period from and including the financial quarter starting on 1 January 2017 until and including the financial quarter ending on 30 June 2017, 6.5:1; and
|
(c)
|
for the period prior to 1 July 2015 and for the period from and including the earlier of (i) the financial quarter starting on 1 July 2017 and (ii) such earlier date on which the Parent (at its sole discretion) notifies the Agent of a reset of the Leverage Ratio covenant to 4.5:1 (the “
Reinstated Leverage Ratio Covenant Date
”) until the Final Maturity Date, 4.5:1.”
|
8.
|
Clause 24.1 (
Minimum Market Value
) of the Facility Agreement shall be deleted and replaced as follows:
|
9.
|
Clause 24.2 (
Market Valuation of the Drillships
) of the Facility Agreement shall be deleted and replaced as follows:
|
(a)
|
The Parent shall (at its own expense):
|
(i)
|
arrange for the Market Value of each of the Drillships to be determined and valued:
|
(A)
|
until the Compliance Certificate in respect of the period ending 30 June 2017 is due to be delivered to the Agent, in order for the same to be communicated to the Agent (but not for the purpose of determining any compliance with Clause 24.1
(Minimum Market Value
)) at the same time as each Compliance Certificate is delivered to the Agent pursuant to Clause 21.2 (
Compliance Certificate
) for the financial quarters ending 30 June and 31 December each year; and
|
(B)
|
once the Compliance Certificate in respect of the period ending 30 June 2017 is due to be delivered to the Agent, for the purpose of every Compliance Certificate to be delivered to the Agent pursuant to Clause 21.2 (
Compliance
|
|
15
|
|
(ii)
|
if an Event of Default has occurred and is continuing, upon the Agent’s request, arrange for the Market Value of the each of the Drillships to be determined.
|
(b)
|
For the avoidance of doubt, there shall be no requirement for the Parent to provide the Market Value of each of the Drillships in any Compliance Certificate delivered to the Agent in respect of any testing period ending prior to 30 June 2017.”
|
10.
|
A new definition of “US Bankruptcy Code” and a new clause 25.17 (
Automatic Acceleration
) shall be incorporated into the Facility Agreement as follows:
|
11.
|
The opening paragraph of clause 25 (
Events of Default
) of the Facility Agreement shall be deleted and replaced as follows:
|
12.
|
Paragraph 1.1 (
Minimum Liquidity
) of schedule 5 (
Form of Compliance Certificate
) of the Facility Agreement shall be deleted and replaced as follows:
|
13.
|
Paragraph 1.2 (
Leverage Ratio
) of schedule 5 (
Form of Compliance Certificate
) of the Facility Agreement shall be deleted and replaced as follows:
|
14.
|
Paragraph 1.7 (
Market Value
) of schedule 5 (
Form of Compliance Certificate
) of the Facility Agreement shall be deleted and replaced as follows:
|
|
16
|
|
|
17
|
|
1.
|
Corporate Authorisations
|
(A)
|
Company certificate (or similar);
|
(B)
|
Articles of Association, Certificate of Incorporation and By-laws (or equivalent);
|
(C)
|
Updated Good Standing Certificate (or similar);
|
(D)
|
Resolutions passed at a board meeting of the Parent evidencing:
|
(i)
|
the approval of the terms of this letter; and
|
(ii)
|
the authorisation of its appropriate officer or officers or other representatives to execute this letter and any other documents necessary for the transactions contemplated by this letter, on its behalf;
|
(E)
|
Certified true copies of valid proof of identity in respect of the persons signing on behalf of the Parent; and
|
(F)
|
Officer’s certificate, including, but not limited to, certification of the relevant corporate documents, specimen signatures of each person signing on behalf of the Parent and confirmations on solvency.
|
(G)
|
Company certificate (or similar);
|
(H)
|
Articles of Association, Certificate of Incorporation and By-laws (or equivalent);
|
(I)
|
Board and shareholders resolutions of the Marshall Islands Obligor evidencing the approval of the terms of, and the transactions contemplated by, this letter, and the authorisation of the Parent to execute this letter;
|
(J)
|
A certificate of good standing issued by the Registrar of Corporations of the Republic of the Marshall Islands as to the good standing of the Marshall Islands Obligor; and
|
(K)
|
Officer’s certificate, including, but not limited to, certification of the relevant corporate documents and specimen signatures of each person signing on behalf of the Marshall Islands Obligor.
|
(L)
|
Company certificate (or similar);
|
(M)
|
Articles of Association (or equivalent);
|
(N)
|
Extract issued by the Board of Trade;
|
|
18
|
|
(O)
|
A power of attorney granted by the Brazilian Security Provider to the Parent, authorising the Parent to sign this letter on its behalf (the “
Brazilian Power of Attorney
”);
|
(P)
|
A shareholder’s resolution from the controlling shareholder of the Brazilian Security Provider approving the Brazilian Power of Attorney; and
|
(Q)
|
Officers certificate attaching updated Articles of Association, an extract issued by the Board of Trade, specimen signatures and proof of identity of the persons signing on behalf of the Brazilian Security Provider, the shareholders’ resolution referred to in paragraph (P) above and the Brazilian Power of Attorney.
|
2.
|
Finance Documents
|
3.
|
Legal opinions
|
(A)
|
Executed legal opinion from Norwegian law counsel to the Lenders relating to Norwegian law matters in respect of this letter; and
|
(B)
|
Executed legal opinion from Bermuda law counsel to the Lenders relating to Bermuda law matters in respect of this letter and the Parent.
|
4.
|
Co-Com Appointment Documents
|
(A)
|
The letter of appointment of coordinators dated on or about the date hereof;
|
(B)
|
The work fee letter dated on or about the date hereof;
|
(C)
|
The letter of engagement of Advokatfirmaet BA-HR DA dated on or about the date hereof;
|
(D)
|
The fee reimbursement letter in connection with the letter of engagement of Advokatfirmaet BA-HR DA dated on or about the date hereof;
|
(E)
|
The letter of engagement of Lazard & Co., Limited dated on or about the date hereof;
|
(F)
|
The agreement with Lazard & Co., Limited appended to the letter of engagement of Lazard & Co, Limited dated on or about the date hereof; and
|
(G)
|
The letter of engagement of White & Case LLP dated on or about the date hereof.
|
5.
|
K-Sure and KEXIM approvals
|
|
19
|
|
1.
|
Hungarian security
|
(A)
|
An amendment agreement to the Hungarian law Share Charge over all the quotas of Seadrill Vela Hungary Kft. amending the references to the Facility Agreement and attaching an updated consolidated version of the Facility Agreement or this letter (as the case may be), duly executed by Seadrill Capricorn Holdings LLC and Seadrill Vela Hungary Kft.;
|
(B)
|
Powers of attorney from Seadrill Capricorn Holdings LLC and Seadrill Vela Hungary Kft. to the Parent’s Hungarian counsel for the execution of the amendment agreement before a Hungarian notary;
|
(C)
|
Power of attorney from ING BANK N.V. to A&O Budapest for the execution of the amendment agreement before a Hungarian notary;
|
(D)
|
Board and shareholders resolutions of Seadrill Capricorn Holdings LLC evidencing the approval of the terms of, and the transactions contemplated by, the amendment agreement;
|
(E)
|
A certificate of good standing issued by the Registrar of Corporations of the Republic of the Marshall Islands as to the good standing of Seadrill Capricorn Holdings LLC;
|
(F)
|
Officer’s Certificate of Seadrill Capricorn Holdings LLC, certifying as to and attaching true, correct and complete copies of its Certificate of Formation and Limited Liability Agreement, the Resolutions of its Board of Directors, and specimen signatures of each person authorized to sign the amendment agreement on behalf of Seadrill Capricorn Holdings LLC;
|
(G)
|
Up-to-date company registry extract;
|
(H)
|
Deed of Foundation;
|
(I)
|
Resolutions passed by Seadrill Capricorn Holdings LLC as the sole quotaholder (shareholder) of Seadrill Vela Hungary Kft. evidencing (i) the approval of the terms of the amendment agreement of the Hungarian law Share Charge and (ii) the authorisation of its appropriate officer or officers or other representatives to execute the amendment agreement of the Hungarian law Share Charge and any other documents necessary for the transactions contemplated by the amendment agreement of the Hungarian law Share Charge, on its behalf;
|
(J)
|
Officer’s certificate, including, but not limited to, certification of the relevant corporate documents, specimen signatures of each person signing on behalf of, and confirmations on solvency for, Seadrill Vela Hungary Kft.
|
(K)
|
Executed legal opinion from Hungarian law counsel to the Lenders relating to Hungarian law matters in respect of the amendment agreement of the Hungarian law Share Charge and Seadrill Vela Hungary Kft.
|
|
20
|
|
(L)
|
Executed legal opinion from Marshall Islands law counsel to the Lenders relating to Marshall Islands law matters in respect of the amendment agreement of the Hungarian law Share Charge and Seadrill Capricorn Holdings LLC.
|
|
21
|
|
1.
|
Notarisation and legalisation in Brazil
|
|
22
|
|
(i)
|
5pm (CET) on 30 June 2017; and
|
(ii)
|
following the occurrence of a Deferral Date Event which is continuing, the time and date at which the Agent (acting on the instructions of the Required Lenders) issues a notice in writing to the Parent specifying the Deferral Date Event and stating that the Deferral Date has occurred and is continuing.
|
(i)
|
failure to meet any of the Milestones within the period relevant to that Milestone specified in paragraph 4(a) of this letter as the same is extended by the applicable grace period referred to in that paragraph and as the same may be amended by the Agent;
|
(ii)
|
breach of any of the Undertakings, provided that it shall not be a Deferral Date Event if such breach is capable of remedy and is remedied within 15 calendar days of such breach (except any breach of the Undertakings set out in paragraphs 3(a)(ii), 3(b) and 4(k));
|
(iii)
|
the occurrence of the final maturity date under any of the Group Facility Agreements as the same may be amended in accordance with the terms of the relevant Group Facility Agreement;
|
(iv)
|
any extension letter with respect to a Maturing Facility Agreement is terminated in accordance with its terms;
|
(v)
|
subject only to any applicable grace period provided under the respective finance documents in respect of any Financial Indebtedness of any member of the Group, any Event of Default occurs and is continuing or any other actual event of default or termination event (however described) occurs and is continuing in respect of any Financial Indebtedness of any member of the Group where the aggregate amount of any such Financial Indebtedness outstanding is equal to or more than USD25,000,000 (or its equivalent in other currencies); and
|
(vi)
|
the occurrence of any enforcement action by or on behalf of any creditor in respect of any Financial Indebtedness of any member of the Group where the aggregate amount of any such Financial Indebtedness is equal to or more than USD25,000,000 (or its equivalent in other currencies).
|
(i)
|
the Parent (for itself, as the Obligors’ agent pursuant to clause 2.3 (
Parent’s Authority
) of the Facility Agreement and as authorised signatory and/or attorney-in-fact for certain Obligors and/or security
|
|
23
|
|
(ii)
|
the Agent has given notification to the Parent and the Lenders under paragraph 3(c) of this letter; and
|
(iii)
|
amendments substantially equivalent to those set out in schedule 1 (
Amendments to the Facility Agreement
) to this letter have become effective in each of the other Group Facility Agreements, in each case ignoring for these purposes any condition to which those substantially equivalent amendments are subject relating solely to those substantially equivalent amendments becoming effective in relation to other Group Facility Agreements.
|
(i)
|
Financial Support existing on the Request Date provided, procured, created or permitted to subsist by any member of the Group to or for the benefit of any person other than a member of the Group or a member of the Minority Holding Group; and
|
(ii)
|
Financial Support (which shall be deemed to include for the purposes of this paragraph (ii) only any equity or similar investment, asset contribution or acquisition of shares or other equity investments) existing on the Request Date provided, procured, created or permitted to subsist by any member of the Group to or for the benefit of any member of the Minority Holding Group,
|
(i)
|
Seadrill Partners LLC;
|
(ii)
|
Archer Limited;
|
(iii)
|
Seamex Ltd.;
|
|
24
|
|
(iv)
|
Seabras Sapura Participacoes Limitida;
|
(v)
|
Seabras Sapura Holding GmbH;
|
(vi)
|
Camburi Drilling BV;
|
(vii)
|
Itaunas Drilling BV;
|
(viii)
|
Sahy Drilling BV; and
|
(ix)
|
Sapurakencana Petroleum Berhad,
|
(i)
|
is made by a member of the Group from a member of the Group;
|
(ii)
|
arises pursuant to the provision of Permitted Financial Support (other than under paragraph (v) of the definition thereof);
|
(iii)
|
is the incorporation of a company with limited liability which on incorporation becomes a member of the Group or the acquisition of a shelf company having no material assets or liabilities at the time of acquisition;
|
(iv)
|
arises pursuant to the joint venture arrangements described in paragraph (iii) of the definition of Permitted Newbuild Contract Payments; or
|
(v)
|
arises pursuant to any legally binding obligation, commitment or arrangement existing on the Request Date.
|
(i)
|
of trading stock or cash made by any member of the Group in the ordinary course of business of the disposing entity and not otherwise restricted by the terms of this letter or the Facility Agreement;
|
(i)
|
of any asset by a member of the Group to another member of the Group;
|
(iii)
|
of assets in exchange for other assets (other than drilling units or shares) comparable or superior as to type, value and quality;
|
(iv)
|
of obsolete or redundant vehicles, plant and equipment for cash;
|
(v)
|
of cash equivalent investments for cash or in exchange for other cash equivalent investments;
|
|
25
|
|
(vi)
|
subject to the prior consent of the Required Lenders and the Required Lenders, Required Majority or Majority Lenders (as therein defined) under each other Group Facility Agreement, of any Drillship or “Drilling Unit”, “Drilling Rig”, “Drillship”, “Collateral Rig” or “Rig” (as such term is defined in any of the Group Facility Agreements) on terms which would not be prohibited (A) with respect to any Drillship, under the Facility Agreement or, (B) with respect to any “Drilling Unit”, “Drilling Rig”, “Drillship”, “Collateral Rig” or “Rig”, under the Group Facility Agreement relating to the relevant “Drilling Unit”, “Drilling Rig”, “Drillship”, “Collateral Rig” or “Rig”;
|
(vii)
|
of the Rigel drilling vessel, rig or other drilling unit, or the shares in the joint venture company which may acquire the same (as described in paragraph (iii) of the definition of Permitted Newbuild Contract Payments) on arm’s length terms and for what the Parent acting reasonably considers to be fair market value or as otherwise required by the terms of the joint venture agreement;
|
(viii)
|
of any asset forming part of the capital equipment pool operated by Seadrill Global Services Limited to any member of the Minority Holding Group consistent with the normal basis on which this capital equipment pool has previously been operated;
|
(ix)
|
the application of cash not otherwise prohibited by this letter or the Finance Documents;
|
(x)
|
the granting of any licence of intellectual property or lease or licence in each case in the ordinary course of trading;
|
(xi)
|
of shares in Sapurakencana Petroleum Berhad on arm’s length terms;
|
(xii)
|
consented to by the Required Lenders; and
|
(xiii)
|
of assets for cash where the net consideration receivable (when aggregated with the net consideration receivable for any other sale, lease, licence, transfer or other disposal not allowed under the preceding paragraphs) does not exceed USD25,000,000 (or its equivalent in other currencies) in total during the Negotiation Period.
|
(i)
|
is Existing Financial Indebtedness;
|
(ii)
|
is or arises under or pursuant to any Permitted Financial Support (other than under paragraph (v) of the definition thereof);
|
(iii)
|
is owed by one member of the Group to another member of the Group;
|
(iv)
|
is or arises under any obligation in respect of Financial Indebtedness of one or more members of the Group which is assumed by or transferred or novated to another member of the Group;
|
(v)
|
is an amount of any liability under an advance or deferred purchase agreement if the agreement is in respect of the supply of assets or services in the ordinary course of trading;
|
(vi)
|
arises from the endorsement of negotiable instruments in the ordinary course of trading;
|
(vii)
|
arises from any netting, setting off, multi-account overdraft, group cash pool or group cash management arrangements existing as at the Request Date (as amended, varied or supplemented);
|
(viii)
|
arises under any derivative or hedging transaction entered into in the ordinary course of business and which is for hedging purposes and not of a speculative nature;
|
|
26
|
|
(ix)
|
is in the form of customer deposits and advance payments received in the ordinary course of trading from customers for services purchased in the ordinary course of trading;
|
(x)
|
arises from the honouring by a bank or other financial institution of a cheque, draft or similar instrument inadvertently drawn against insufficient funds in the ordinary course of trading (provided that such Financial Indebtedness is extinguished within ten Business Days);
|
(xi)
|
is consented to by the Required Lenders; or
|
(xii)
|
is not permitted by the preceding paragraphs and the outstanding principal amount of which does not exceed (A) for the period from the Request Date to and including the 30 September 2016 USD25,000,000 (or its equivalent in other currencies), and (B) for the period from 30 September 2016 USD50,000,000 (or its equivalent in other currencies) in each case in aggregate for the Group at any time.
|
(i)
|
the Existing Financial Support Arrangements, subject to paragraph 4(k) of this letter;
|
(ii)
|
any Financial Support which is provided, procured, created or permitted to subsist by any member of the Group to another member of the Group;
|
(iii)
|
any Financial Support which is provided, procured, created or permitted to subsist in the ordinary course of business in respect of the performance by a member of the Group of its obligations under any contract, agreement, deed, law, regulation or other legally binding arrangement (other than obligations which constitute Financial Indebtedness);
|
(iv)
|
any Financial Support which is provided, procured, created or permitted to subsist in respect of the netting or set-off of debit and credit balances of members of the Group (including as part of multi-account overdraft, group cash pool or group cash management arrangements) constituting Permitted Security;
|
(v)
|
Financial Support constituting Permitted Financial Indebtedness (other than under paragraph (ii) of the definition thereof) or a Permitted Acquisition (other than under paragraph (ii) of the definition thereof);
|
(vi)
|
any Financial Support which is provided, procured, created or permitted to subsist in the ordinary course of trading of any member of the Group;
|
(vii)
|
any Financial Support consented to by the Required Lenders;
|
(viii)
|
subject to paragraph 4(k) of this letter, any Financial Support (which shall be deemed to include for the purposes of this sub-paragraph (viii) only any equity or similar investment, asset contribution or acquisition of shares or other equity investments) which is provided, procured, created or permitted to subsist by any member of the Group to or for the benefit of Seamex Ltd. and/or any of Seamex Ltd.’s Subsidiaries (including by the extension of the availability of Existing Financial Support Arrangements) in an aggregate amount at any time not exceeding by more than USD101,000,000 (or its equivalent in other currencies) the aggregate amount of Existing Financial Support Arrangements to or for the benefit of Seamex Ltd. or Seamex Ltd.’s Subsidiaries as at the Request Date;
|
(ix)
|
subject to paragraph 4(k) of this letter, Financial Support which is provided, procured, created or permitted to subsist in connection with the replacement, refinancing, amendment, extension or (in the case of the Rubi Guarantees, as defined below) issuance of bank guarantees and letters of credit, including (A) the irrevocable standby letter of credit issued by Nordea Bank AB in support of the obligations of Sapura Onix GmbH in an amount of USD 7,531,358 dated 17 April 2015, (B) the irrevocable standby letter of
|
|
27
|
|
(x)
|
Financial Support not permitted by the preceding paragraphs and the outstanding amount of which does not exceed USD25,000,000 (or its equivalent in other currencies) in aggregate for the Group at any time.
|
(i)
|
any payments in respect of stacking costs;
|
(ii)
|
any payments to delay delivery provided that the Parent uses its reasonable endeavours to keep these to a minimum taking into account the Group’s exposure under the relevant Newbuild Contract and related Newbuild Contracts;
|
(iii)
|
any costs and expenses in respect of Newbuild Contracts between (1) the Dalian Shipbuilding Industry Offshore Co Ltd and any of Seadrill Titan Ltd, Seadrill Proteus Ltd, Seadrill Rhea Ltd, Seadrill Tethys Ltd, Seadrill Hyperion Ltd, Seadrill Umbriel Ltd, Seadrill Dione Ltd or Seadrill Mimas Ltd, or (2) the Jurong Shipyard Pte Ltd and North Atlantic Rigel Ltd in each case provided that such costs and expenses relate to the entering into of a joint venture agreement between the relevant entity and Dalian Shipbuilding Industry Offshore Co Ltd (or associated person thereof) or Jurong Shipyard Pte Ltd (or associated person thereof), as applicable with respect to the relevant drilling vessel, rig or other drilling unit and not, for the avoidance of doubt, the payment of any additional or final instalments with respect to such Newbuild Contracts;
|
(iv)
|
subject to paragraph 4(k) of this letter, any payment made pursuant to any legally binding contractual term of any Newbuild Contract existing as at the Request Date; and
|
(v)
|
any payment consented to by the Required Lenders.
|
(i)
|
any Existing Security;
|
(ii)
|
any rights of set-off arising in respect of any member of the Group in the ordinary course of its trading and not securing Financial Indebtedness;
|
(iii)
|
any lien arising by operation of law and in the ordinary course of business and not as a result of any default or omission by any member of the Group;
|
|
28
|
|
(iv)
|
any Security Interest arising in connection with any unpaid Tax where the liability to pay such Tax is being contested in good faith by appropriate proceedings;
|
(v)
|
any Security Interest arising under any court order or injunction or for costs arising in connection with any litigation or court proceedings being contested by any member of the Group in good faith;
|
(vi)
|
any netting or set-off arrangement entered into by any member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances of members of the Group (including as part of any multi-account overdraft, group cash pool or group cash management arrangements);
|
(vii)
|
any payment or close out netting or set-off arrangement pursuant to any derivative or hedging transaction entered into by any member of the Group which constitutes Permitted Financial Indebtedness;
|
(viii)
|
any collateral provided on customary market terms in respect of any member of the Group’s obligations under any derivative or hedging transaction which constitutes Permitted Financial Indebtedness entered into after the Request Date the amount of which does not exceed USD 25,000,000 (or its equivalent in any other currency or currencies) at any time;
|
(ix)
|
any Security Interest arising under any retention of title, hire purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied to any member of the Group in the ordinary course of business and on the supplier’s standard or usual terms and not arising as a result of any default or omission by any member of the Group;
|
(x)
|
any Permitted Encumbrance permitted to subsist or arise under the Facility Agreement, or “Permitted Encumbrance” permitted to subsist or arise under or pursuant to and as such term is defined in any of the Group Facility Agreements, provided that such Permitted Encumbrance or “Permitted Encumbrance” is permitted to subsist or arise pursuant to the terms of the Facility Agreement or relevant Group Facility Agreement (as applicable) over an asset owned immediately prior to the creation of the relevant Security Interest by an Obligor (other than the Parent) under the Facility Agreement or an “Obligor” (other than the Parent) under the terms of the relevant Group Facility Agreement;
|
(xi)
|
any Security Interest which is consented to by the Required Lenders; and
|
(xii)
|
any Security Interest securing indebtedness the outstanding principal amount of which (when aggregated with the outstanding principal amount of any other indebtedness which has the benefit of any Security Interest given by any member of the Group other than any permitted under the paragraphs above) does not exceed USD25,000,000 (or its equivalent in other currencies) at any time.
|
|
29
|
|
|
30
|
|
To:
|
Seadrill Polaris Ltd.
c/o Seadrill Management Ltd. 2nd Floor, Building 11, Chiswick Business Park 566 Chiswick High Road London W4 5YS United Kingdom |
Attn:
|
Jonas Ytreland
|
With a copy to:
|
Seadrill Limited
c/o Seadrill Management Ltd. 2 nd Floor, Building 11, Chiswick Business Park 566 Chiswick High Road London W4 5YS United Kingdom |
Attn:
|
Jonas Ytreland
|
1.
|
CONSENT
|
2.
|
AMENDMENTS TO THE FACILITY AGREEMENT
|
(a)
|
On the Effective Date, the amendments to the Facility Agreement set out in schedule 1 (
Amendments to the Facility Agreement
) to this letter will be made to the Facility Agreement to reflect the consent of the Agent (on behalf of the Required Majority) to the Amendment Request in accordance with paragraph 1 above.
|
(b)
|
For the avoidance of doubt, clause 8.4 (
Minimum Market Value
) of the Facility Agreement will not apply whilst the minimum Market Value covenant in clause 24.1 (
Minimum Market Value
) of the Facility Agreement is suspended.
|
|
|
|
(c)
|
The amendments to the Facility Agreement in schedule 1 (Amendments to the Facility Agreement) to this letter (other than paragraphs 2, 3, 5, 6, 10, 11 and 12 of schedule 1) and the Agent’s confirmation in paragraph 5 below shall only be effective until the Deferral Date, on which date such amendments will be reversed, such confirmation shall cease to have effect and the rights and remedies available to the Lenders prior to the making of such amendments and such confirmation shall be reinstated in full.
|
3.
|
CONDITIONS PRECEDENT
|
4.
|
PARENT’S UNDERTAKINGS
|
(a)
|
it shall:
|
(i)
|
by no later than 16 May 2016 provide to the Co-Com and Co-Com Advisors an indicative legal analysis prepared by the Parent and its advisors for contingency planning purposes including without limitation in respect of (1) the potential use of an English and/or local law scheme of arrangement to implement a non-consensual restructuring, (2) the potential use of a US Chapter 11 plan of reorganisation to implement a non-consensual restructuring, and (3) the potential legal impact on the Parent of a change in governing law, in each case with respect to the Group Facility Agreements and any other instrument relating to Financial Indebtedness of any member of the Group;
|
(ii)
|
by no later than 16 May 2016, present to the Co-Com and the Co-Com Advisors its proposals for the recapitalisation of the Group broadly consistent with the proposals presented by the Parent to the Co-Com at the meeting between the Parent and the Co-Com on 10 March 2016 and showing sustainability of funding through 2020, accompanied by an updated financial model with assumptions based on updated feedback from Fearnleys and in respect of cost items assumptions based on any guidance provided by the Parent to the capital markets;
|
(iii)
|
by no later than 30 June 2016, present to the lenders and each of the facility agents under the Group Facility Agreements for approval amendment and extension requests
|
|
2
|
|
(iv)
|
at any time after the presentation of amendment and extension requests for approval pursuant to paragraph (iii) above and by no later than 1 September 2016, if requested by the Co-Com on not less than 10 calendar days’ prior notice, on a single occasion, host a meeting for the Co-Com (and, if requested by the Co-Com, all lenders under the Group Facility Agreements) at which the Parent will present an update on the status of its plans for and developments in relation to the restructuring of the bonds and notes issued by the Parent and other members of the Group including without limitation principal and coupon amounts payable thereunder and an update on its proposal for the recapitalisation of the Group; and
|
(v)
|
use reasonable endeavours to ensure that by no later than 31 December 2016 and otherwise to ensure that by no later than 30 April 2017, the amendments contemplated in the amendment and extension requests presented for approval pursuant to paragraph (iii) above have become effective and its proposed recapitalisation of the Group has been implemented on terms satisfactory to the Required Majority,
|
(A)
|
each of the dates given in the Milestones above (other than the Milestones set out in paragraphs (iv) and (v) above for which no grace period applies) is subject to a grace period of 15 calendar days, or 30 calendar days in respect of the Milestone set out in paragraph (iii) above; and
|
(B)
|
each Milestone, on a single occasion only, may be varied at the written request of the Parent with the consent of the Agent in its sole discretion if the request relates to a further delay of 15 calendar days beyond either the due date or (if applicable) the end of the grace period referred to in (A) above. Other than to the extent that the Required Majority notify the Agent in writing to the contrary before the Agent gives such a consent, the Required Majority are by their approval of this letter deemed to have authorised (but not required) the Agent to give that consent. The Agent confirms that it has considered whether it is able to consent to such a delay without requiring instructions from the Required Majority in addition to the terms of this letter and has satisfied itself that it is able to do so. The Agent shall not be liable for any damages, costs or losses whatsoever as a result of giving any such consent;
|
(b)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period incur or allow to remain outstanding any Financial Indebtedness other than Permitted Financial Indebtedness;
|
(c)
|
during the Negotiation Period, it shall not, irrespective of any term of the Finance Documents to the contrary:
|
(i)
|
make any dividend payments or other distributions in respect of its share capital to its shareholders;
|
(ii)
|
enter into new total return swaps (for the avoidance of doubt, excluding roll-over or unwinding, in whole or in part, of existing total return swaps (which roll-over or
|
|
3
|
|
(iii)
|
buy back or redeem any shares in its capital,
|
(d)
|
during the Negotiation Period, it shall not (and it shall procure that no other member of the Group shall) prepay, repay, purchase or otherwise acquire, in each case voluntarily, any loans under any of the Group Facility Agreements (provided that it shall not be prohibited from taking any action with respect to Financial Indebtedness as described in sub-paragraph (iv) of the definition of Permitted Financial Indebtedness);
|
(e)
|
during the Negotiation Period, it shall not (and it shall procure that no other member of the Group shall) buy back or redeem, in each case voluntarily, any bonds or notes issued by it;
|
(f)
|
during the Negotiation Period, it shall not (and it shall procure that no other member of the Group shall) voluntarily close out any hedging or derivative transaction entered into with any person who is not a member of the Group except for the voluntary closing out of hedging or derivative transactions (A) where the Group is over-hedged and only the over-hedged position is being closed out or (B) where the same does not crystallise cash outflows for members of the Group during the Negotiation Period other than scheduled payments in the ordinary course under the terms of the restructured hedging or derivative transaction and so that any negative values are baked into the rates agreed as part of the restructuring;
|
(g)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period acquire a company or any shares or a business or undertaking (or, in each case, any interest in any of them) or make any equity injections or contributions in each case except for Permitted Acquisitions;
|
(h)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset other than as part of a Permitted Disposal;
|
(i)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period make any payment to any person who is not a member of the Group under any Newbuild Contract, other than any Permitted Newbuild Contract Payments;
|
(j)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period provide, procure, create or permit to subsist any Financial Support other than any Permitted Financial Support;
|
(k)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period:
|
|
4
|
|
(i)
|
make any payment pursuant to any Newbuild Contract existing as at the Request Date (other than payments falling within paragraphs (i) to (iii) or (v) of the definition of Permitted Newbuild Contract Payments);
|
(ii)
|
make any payment to, or for the benefit of, any member of the Minority Holding Group:
|
(1)
|
under any Existing Financial Support Arrangements provided, procured, created or permitted to subsist to or for the benefit of such member of the Minority Holding Group (including, without limitation, any Financial Support provided with respect to the financial indebtedness of Archer Limited and its Subsidiaries from time to time, including under the equity undertaking originally dated 22 December 2015 between the Parent, Archer Limited and Danske Bank A/S (the “
Archer Equity Undertaking
”)); or
|
(2)
|
in respect of any Financial Support provided, procured, created or permitted to subsist by any member of the Group to or for the benefit of Seamex Ltd. and/or any of Seamex Ltd.’s Subsidiaries; or
|
(3)
|
in respect of any Financial Support which is provided, procured, created or permitted to subsist in connection with the replacement, refinancing, amendment or extension (or in the case of the Rubi Guarantees, issuance) of bank guarantees and letters of credit with a maturity date falling within the Negotiation Period,
|
(A)
|
in advance of making any such Cash Leakage Payment, the Parent shall, with appropriate legal advice, consider the rights and obligations of the relevant parties with respect to such Cash Leakage Payment to determine whether that Cash Leakage Payment can be legally reduced, postponed, cancelled or otherwise avoided under the terms of the agreement under which the requirement to make that Cash Leakage Payment arises or any related agreements, in each case without materially and adversely affecting the interests of the Group and its financial creditors;
|
(B)
|
if the Parent determines acting reasonably that the Cash Leakage Payment can be so reduced, postponed, cancelled or otherwise avoided, the Parent shall use its reasonable endeavours to achieve the same;
|
(C)
|
if the Parent determines acting reasonably that the Cash Leakage Payment cannot be so reduced, postponed, cancelled or otherwise avoided, unless the Parent acting reasonably considers that to do so would not be in the interests of the Group and its financial creditors (because for example, but without limitation, the same risks resulting in additional amounts being claimed from members of the Group) the Parent shall:
|
(1)
|
use its reasonable endeavours to engage with the relevant payee (or such other party whose consent may be required) to negotiate in good
|
|
5
|
|
(2)
|
promptly provide the Co-Com with details of any proposal made by the Parent to the relevant payee (including, without limitation, with respect to the negotiation in respect of the Archer Equity Undertaking); and
|
(3)
|
keep the Co-Com updated as to any material developments with respect to such negotiation and provide the Co-Com with all information as the Co-Com may reasonably request in respect of such negotiations; and
|
(D)
|
the Parent shall give the Co-Com notice as soon as reasonably practicable on becoming aware that it has become obliged, or is likely to become obliged within a period of 30 calendar days, to make a Cash Leakage Payment, and shall provide the Co-Com with all information as the Co-Com may reasonably request and which the Parent is legally permitted to provide with respect to that Cash Leakage Payment and its circumstances,
|
(l)
|
it shall not (and shall ensure that no other member of the Group shall) during the Negotiation Period create or permit to subsist any Security Interest over any of its assets other than Permitted Security;
|
(m)
|
it shall not, and shall procure that no other member of the Group shall, during the Negotiation Period enter into any agreement in respect of the extension of the final maturity date under any Maturing Facility Agreement other than (A) on terms satisfactory to Required Majority and the Required Lenders, Required Majority or Majority Lenders (as therein defined) under each other Group Facility Agreement or (B) any agreement entered into pursuant to the extension approval letters relating to the Maturing Facility Agreements dated on or about the date of this letter;
|
(n)
|
it shall not, and shall procure that no other member of the Group shall, during the Negotiation Period agree to amendments to any of the other Group Facility Agreements or any other instrument relating to Financial Indebtedness of any member of the Group (provided that this provision shall apply only to amendments to any of the Group Facility Agreements, any of the Ship Finance Arrangements or any hedging agreement entered into by any Group member except in respect of amendments to economics) on more favourable terms in any material respect than are provided with respect to the Facility Agreement or, with respect to an extension of tenor, the Maturing
|
|
6
|
|
(o)
|
during the Negotiation Period, if any member of the Group agrees to pay higher compensation relative to the Facility Agreement or, with respect to an extension, the Maturing Facility Agreements (whether in the form of margin increases, consent fees or otherwise), save as (A) contemplated by the proposals for the recapitalisation of the Group described in paragraphs (a)(ii) and (a)(iii) above or (B) arising from the extension of the Maturing Facility Agreements on the basis agreed with the Required Majority) or any agreement entered into pursuant to the extension approval letters relating to the Maturing Facility Agreements dated on or about the date of this letter to secure amendments in any of the other Group Facility Agreements or any other instrument relating to Financial Indebtedness of any member of the Group, it will procure that the terms of the Facility Agreement are amended to reflect this higher compensation and will enter into, or procure that such other member of the Group enters into, such documents as the Agent may reasonably require in order to reflect such higher compensation, save to the extent that the aggregate cost to the Group under this paragraph 4(o) and under paragraph 4(n) above does not exceed USD25,000,000 (or its equivalent in other currencies);
|
(p)
|
during the Negotiation Period it shall cooperate in good faith with the finance parties under the Group Facility Agreements for the appointment of (i) a financial advisor for them (the “Financial Advisor”), (ii) a coordinating committee of them (the “
Co-Com
”) and (iii) Norwegian and international counsel for them (together with the Financial Advisor, the “
Co-Com Advisors
”), in each case as soon as reasonably practicable and on terms (including as to the scope of the Financial Advisor’s work) to be agreed (acting reasonably);
|
(q)
|
it shall reimburse the agents, lenders and export credit agencies under the Group Facility Agreements for the properly incurred and documented fees of the Co-Com and the Co-Com Advisors in connection with the recapitalisation of the Group incurred in accordance with the terms and scope of work agreed in the engagement letters relating to the appointment of the Co-Com and the Co-Com Advisors agreed by the Parent;
|
(r)
|
it shall in good faith consider the requirements of the Co-Com in framing the proposal for the recapitalisation of the Group;
|
(s)
|
during the Negotiation Period it shall co-operate with the Co-Com Advisors and, subject to paragraph (v)(ii), provide them with information relating to the Group reasonably requested by them, in the case of the Financial Advisor consistent with the agreed scope of work;
|
(t)
|
during the Negotiation Period it shall provide the Co-Com with regular updates on the status of its plans for and developments in relation to the bonds and notes issued by the Parent and of its proposal for the recapitalisation of the Group;
|
(u)
|
during the Negotiation Period it shall:
|
|
7
|
|
(i)
|
use its reasonable endeavours to cooperate with the Co-Com and Co-Com Advisors in relation to contingency planning in case a consensual restructuring is not achievable, subject always to the fiduciary and other duties of the boards of directors of the Parent and other members of the Group; and
|
(ii)
|
make such senior management or officers of the Parent, and each other member of the Group, as the Co-Com may reasonably request, available to provide reasonable assistance in all matters of reasonable significance in relation to the implementation of the recapitalisation of the Group, at such times as the Co-Com may reasonably request after giving reasonable notice; and
|
(iii)
|
subject to paragraph (v)(ii), provide the Co-Com with all information in respect of, and access to, the business of the Group reasonably requested by the Co-Com to complete any due diligence in relation to the recapitalisation proposal as soon as reasonably practicable;
|
(i)
|
subject to paragraph (ii) below, it shall (and shall ensure that each member of the Group shall) during the Negotiation Period upon reasonable notice, supply the Co-Com with such information in relation to the Group as is available to it or any member of the Group as the Co-Com may reasonably require in connection with the restructuring of the Group’s debt;
|
(ii)
|
notwithstanding any provision in the Finance Documents to the contrary, neither it nor any member of the Group shall be required to provide any information which is either (A) subject to a duty of confidentiality owed to a third party, (B) of a highly commercially sensitive nature, or (C) legally privileged provided that should the Parent decline to provide any information to the Co-Com in reliance on paragraph (A), (B) or (C) the Parent shall provide such information to the Co-Com Advisors only in the case of paragraph (B), and in each case shall inform the Co-Com of the basis for refusal to provide the information to the CoCom and shall at the request of the Co-Com comply with paragraph (iii) below; and
|
(iii)
|
it shall, at the request of the Co-Com, either (A) seek the consent of any party to whom it owes a duty of confidentiality with respect to the information (provided that it shall not be required to seek consent where the Parent reasonably considers that to do so would be commercially damaging) or (B) consider in conjunction with its advisers whether the relevant information can be provided in such a way or format as to avoid issues of third party confidentiality, commercial sensitivity or legal privilege, including but not limited to by redaction, summary or provision of information to the Co-Com or to the Co-Com Advisors only and if such information can be so provided the Parent will procure that it is so provided as soon as reasonably practicable;
|
(w)
|
during the Negotiation Period it shall provide the Co-Com with a monthly information update in the format agreed with the Co-Com prior to the date of this letter and derived from the Group’s existing management reporting, which shall include:
|
(i)
|
latest cash flow information;
|
(ii)
|
an update on material trade creditors and trade debtors of the Group;
|
|
8
|
|
(iii)
|
an update on the planned maintenance and docking of the rigs and on progress with respect to new builds and new build contracts;
|
(iv)
|
an update on material changes in liabilities owed between members of the Group;
|
(v)
|
an update on swaps and/or other derivative transactions entered into by any member of the Group;
|
(vi)
|
an update on material changes in the contracts portfolio of the Group including any material contract renewals, cancellations, dayrate amendments or other re-negotiations;
|
(vii)
|
to the extent such undrawn commitments are available, details of any anticipated need for a member of the Group to utilise any undrawn commitments under any of the Group Facility Agreements in the next 90 days;
|
(viii)
|
an update on steps taken by the Parent and other members of the Group to procure and maximise payments from each member of the Minority Holding Group to the Group;
|
(ix)
|
an update on steps taken by the Parent and other members of the Group in accordance with paragraph 4(k) above including (subject to paragraph (v)(ii)) a summary or details (on a non-reliance basis) of advice obtained by the Parent or other relevant member of the Group with respect to the rights and obligations of the relevant parties with respect to any relevant Cash Leakage Payment;
|
(x)
|
an update on the aggregate amount of Financial Support which has been provided, procured, created or permitted to subsist by any member of the Group in connection with the replacement, refinancing, amendment, extension or (in the case of the Rubi Guarantees) issuance of bank guarantees and letters of credit and the forecasted reduction of such Financial Support during the Negotiation Period; and
|
(xi)
|
an updated assessment of potential cash leakage from the Group in the next 12 months pursuant to the Financial Support provided, procured, created or permitted to subsist to or for the benefit of any member of the Minority Holding Group and demands which may be made in respect of such Financial Support;
|
(x)
|
during the Negotiation Period, to the extent such undrawn commitments are available, it shall provide the Co-Com with not less than 15 calendar days’ notice of any anticipated utilisation by any member of the Group of undrawn commitments under any of the Group Facility Agreements; and
|
(y)
|
during the Negotiation Period it shall promptly notify the Co-Com of the occurrence of any of the matters described in paragraph 6(e) below and of the occurrence of any Deferral Date Event.
|
5.
|
AGENT’S CONFIRMATION
|
|
9
|
|
6.
|
AGREEMENT BY OBLIGORS
|
(a)
|
The Parent (for itself and as the Obligors’ agent pursuant to clause 2.3 (
Parent’s Authority
) of the Facility Agreement) by its signature of this letter agrees and acknowledges that the guarantees and indemnities contained in the Facility Agreement and/or each other Finance Document to which it or any other Obligor is a party shall, on and after the Effective Date, continue in full force and effect and extend to the liabilities and obligations of each of the Obligors under the Facility Agreement and the other Finance Documents (as amended and/or amended and restated from time to time) including as varied, amended, supplemented or extended by this letter.
|
(b)
|
The Parent (for itself and as the Obligors’ agent pursuant to clause 2.3 (
Parent’s Authority
) of the Facility Agreement) by its signature of this letter agrees and acknowledges that, on and after the Effective Date:
|
(i)
|
the obligations of the Parent and each other Obligor arising under the Facility Agreement and/or each other Finance Document to which it or any Obligor is a party constitute secured obligations (howsoever defined); and
|
(ii)
|
the Security Interests created by the Parent and each other Obligor under any Security Document:
|
(A)
|
continue in full force and effect; and
|
(B)
|
extend to the obligations of the Obligors under the Facility Agreement and/or the other Finance Documents (as amended and/or amended and restated from time to time) including as varied, amended, supplemented or extended by this letter, in each case subject to the limitations set out in the Security Documents.
|
(c)
|
The Parent by its signature of this letter, in its capacity as Parent, confirms that any Security Interest created pursuant to the Finance Documents by any party thereto shall, on and after the Effective Date, continue in full force and effect and extend to the liabilities and obligations of each of the Obligors under the Facility Agreement and the other Finance Documents (as amended and/or amended and restated from time to time) including as varied, amended, supplemented or extended by this letter.
|
(d)
|
The Parent (for itself and as the Obligors’ agent pursuant to clause 2.3 (
Parent’s Authority
) of the Facility Agreement) shall, at the request of the Agent and at its own expense, do all such acts and things reasonably necessary or desirable to give effect to the amendments effected or to be effected pursuant to this letter.
|
(e)
|
The Parent by its signature of this letter agrees that during the Negotiation Period:
|
(i)
|
the occurrence of the final maturity date under any Group Facility Agreement (as the same may be amended in accordance with the terms of that Group Facility Agreement) or an acceleration event under any Group Facility Agreement;
|
(ii)
|
an acceleration event in respect of any Financial Support provided, procured, created or permitted to subsist to or for the benefit of any member of the Minority Holding Group where the aggregate amount of such Financial Support exceeds USD50,000,000 (or its equivalent in other currencies); or
|
|
10
|
|
(iii)
|
failure to meet any of the Milestones within the period relevant to that Milestone specified in paragraph 4(a) of this letter as the same is extended by the applicable grace period referred to in that paragraph and as the same may be amended by the Agent; or
|
(iv)
|
breach of any of the Undertakings, in each case unless such breach is capable of remedy and is remedied within 15 calendar days of such breach (other than any breach of the Undertaking as set out in paragraph 4(k)),
|
(f)
|
The Parent by its signature of this letter agrees that if each of the Maturing Facility Agreements is extended pursuant to extension approval letters dated on or about the date of this letter, no Obligor will during the Negotiation Period be permitted to utilise the amount of any commitments under the Facility Agreement which were undrawn as at the Request Date.
|
7.
|
FEES, COSTS, DISBURSEMENTS AND OTHER AMOUNTS
|
(a)
|
The Parent shall pay to the Agent, for the account of each Lender who has agreed to the terms of the Amendment Request subject to the terms and conditions set out herein and informed the Agent thereof, a fee of 10 basis points calculated on that Lender’s available and outstanding Commitment.
|
(b)
|
The fee set out in paragraph (a) above, together with any fees, costs, disbursements or other amounts (and any VAT thereon) invoiced on or prior to the Effective Date (it being understood that each such invoice shall include details of the relevant payee (including name, bank account, sort code, IBAN and/or CHAPS) and a copy of each such invoice shall be provided to the attention of Jonas Ytreland at Seadrill Limited, 2nd Floor, Building 11, Chiswick Business Park, 566 Chiswick High Road, London W4 5YA and/or a scanned version sent to jonas.ytreland@seadrill.com) due and payable under or in connection with the documents referred to in paragraph 4 (
Co-Com Appointment Documents
) of schedule 2 (
Conditions Precedent
) to this letter shall be payable within five Business Days of the Effective Date.
|
8.
|
LENDERS’ RIGHTS
|
9.
|
CONTINUING AGREEMENT AND FINANCE DOCUMENT
|
|
11
|
|
(a)
|
Except as expressly consented to pursuant to this letter, the provisions of the Finance Documents including the Facility Agreement and Security Documents shall continue in full force and effect. The consent granted in this letter does not extend to any matter other than expressly set out in this letter.
|
(b)
|
The Agent and the Parent designate this letter a “Finance Document” for the purposes of the Facility Agreement.
|
(c)
|
The provisions of clauses 1.2 (
Construction
), and 32 (
Notices
) of the Facility Agreement apply to this letter as though they were set out in full in this letter except that references to the Facility Agreement are to be construed as references to this letter.
|
(d)
|
This letter may be executed in counterparts each of which, when taken together, shall constitute one and the same agreement.
|
(e)
|
This letter and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with Norwegian law. Any disputes resulting from this letter will be resolved in accordance with the terms of the Facility Agreement applicable to dispute resolution. These terms are incorporated into this letter by reference as if set out in full in this letter.
|
|
12
|
|
|
13
|
|
1.
|
The definition of “Equity” in clause 1.1 (
Definitions
) of the Facility Agreement shall be deleted and replaced as follows:
|
2.
|
If each of the Maturing Facility Agreements is extended pursuant to extension approval letters dated on or about the date of this letter, the definition of “Minimum Liquidity” in clause 1.1 (
Definitions
) of the Facility Agreement shall be deleted and replaced as follows:
|
3.
|
The definition of “Step-up Margin” in clause 1.1 (
Definitions
) of the Facility Agreement shall be deleted and replaced as follows:
|
(a)
|
if the Leverage Ratio is from and including 4.50:1 up to and including 4.99:1, 0.125 per cent per annum;
|
(b)
|
if the Leverage Ratio is from and including 5:00:1 up to and including 5.49:1, 0.250 per cent per annum;
|
(c)
|
if the Leverage Ratio is from and including 5.50:1 up to and including 5.99:1, 0.750 per cent per annum; and
|
(d)
|
if the Leverage Ratio is equal to or in excess of 6:00:1, 1.500 per cent per annum,
|
4.
|
The definition of “Total Assets” in clause 1.1 (
Definitions
) of the Facility Agreement shall be deleted and replaced as follows:
|
5.
|
Paragraph (a) of clause 21.4 (
Information – Miscellaneous
) of the Facility Agreement shall be deleted and replaced as follows:
|
(i)
|
any breach of material contracts (including rig building contracts and charter contracts) or any material litigation, judgment, order, injunction, restraint, arbitration or administrative proceedings which is current, threatened, alleged or pending against any of the Obligors or any member of the Group; and
|
|
14
|
|
(ii)
|
any changes to the senior management of (A) the Parent or (B) any member of the Group where the change of senior management concerned is of material significance to the Group as a whole;”
|
6.
|
Clause 22.1 (
Minimum Liquidity
) of the Facility Agreement shall be deleted and replaced as follows:
|
7.
|
Clause 22.2 (
Leverage Ratio
) of the Facility Agreement shall be deleted and replaced as follows:
|
(a)
|
for the period from and including the financial quarter starting on 1 July 2015 until and including the financial quarter ending on 31 December 2016, 6.0:1;
|
(b)
|
for the period from and including the financial quarter starting on 1 January 2017 until and including the financial quarter ending on 30 June 2017, 6.5:1; and
|
(c)
|
for the period prior to 1 July 2015 and for the period from and including the earlier of (i) the financial quarter starting on 1 July 2017 and (ii) such earlier date on which the Parent (at its sole discretion) notifies the Agent of a reset of the Leverage Ratio covenant to 4.5:1 (the “
Reinstated Leverage Ratio Covenant Date
”) until the Final Maturity Date, 4.5:1.”
|
8.
|
Clause 24.1 (
Minimum Market Value
) of the Facility Agreement shall be deleted and replaced as follows:
|
9.
|
Clause 24.2 (
Market Valuation of the Drilling Unit
) of the Facility Agreement shall be deleted and replaced as follows:
|
(a)
|
The Borrower shall (at its own expense):
|
(i)
|
arrange for the Market Value of the Rig to be determined and valued:
|
(A)
|
until the Compliance Certificate in respect of the period ending 30 June 2017 is due to be delivered to the Agent, in order for the same to be communicated to the Agent (but not for the purpose of determining any compliance with Clause 24.1
(Minimum Market Value
)) at the same time as each Compliance Certificate is delivered to the Agent pursuant to Clause 21.2 (
Compliance Certificate
) for the financial quarters ending 30 June and 31 December each year; and
|
(B)
|
once the Compliance Certificate in respect of the period ending 30 June 2017 is due to be delivered to the Agent, for the purpose of every Compliance Certificate to be delivered to the Agent pursuant to Clause 21.2 (
Compliance
|
|
15
|
|
(ii)
|
if an Event of Default has occurred and is continuing, upon the Agent’s request, arrange for the Market Value of the Drilling Unit to be determined.
|
(b)
|
For the avoidance of doubt, there shall be no requirement for the Borrower to provide the Market Value of the Drilling Unit in any Compliance Certificate delivered to the Agent in respect of any testing period ending prior to 30 June 2017.”
|
10.
|
A new definition of “US Bankruptcy Code” and a new clause 25.17 (
Automatic Acceleration
) shall be incorporated into the Facility Agreement as follows:
|
11.
|
The opening paragraph of clause 25 (
Events of Default
) of the Facility Agreement shall be deleted and replaced as follows:
|
12.
|
Paragraph 1.1 (
Minimum Liquidity
) of schedule 6 (
Form of Compliance Certificate
) of the Facility Agreement shall be deleted and replaced as follows:
|
13.
|
Paragraph 1.2 (
Leverage Ratio
) of schedule 6 (
Form of Compliance Certificate
) of the Facility Agreement shall be deleted and replaced as follows:
|
14.
|
Paragraph 1.6 (
Market Value
) of schedule 6 (
Form of Compliance Certificate
) of the Facility Agreement shall be deleted and replaced as follows:
|
|
16
|
|
|
17
|
|
1.
|
Corporate Authorisations
|
(A)
|
Company certificate (or similar);
|
(B)
|
Articles of Association, Certificate of Incorporation and By-laws (or equivalent);
|
(C)
|
Updated Good Standing Certificate (or similar);
|
(D)
|
Resolutions passed at a board meeting of the Parent evidencing:
|
(i)
|
the approval of the terms of this letter; and
|
(ii)
|
the authorisation of its appropriate officer or officers or other representatives to execute this letter and any other documents necessary for the transactions contemplated by this letter, on its behalf;
|
(E)
|
Certified true copies of valid proof of identity in respect of the persons signing on behalf of the Parent; and
|
(F)
|
Officer’s certificate, including, but not limited to, certification of the relevant corporate documents, specimen signatures of each person signing on behalf of the Parent and confirmations on solvency.
|
2.
|
Finance Documents
|
3.
|
Legal opinions
|
(A)
|
Executed legal opinion from Norwegian law counsel to the Lenders relating to Norwegian law matters in respect of this letter; and
|
(B)
|
Executed legal opinion from Bermuda law counsel to the Lenders relating to Bermuda law matters in respect of this letter and the Parent.
|
4.
|
Co-Com Appointment Documents
|
(A)
|
The letter of appointment of coordinators dated on or about the date hereof;
|
(B)
|
The work fee letter dated on or about the date hereof;
|
(C)
|
The letter of engagement of Advokatfirmaet BA-HR DA dated on or about the date hereof;
|
(D)
|
The fee reimbursement letter in connection with the letter of engagement of Advokatfirmaet BA-HR DA dated on or about the date hereof;
|
(E)
|
The letter of engagement of Lazard & Co., Limited dated on or about the date hereof;
|
|
18
|
|
(F)
|
The agreement with Lazard & Co., Limited appended to the letter of engagement of Lazard & Co, Limited dated on or about the date hereof; and
|
(G)
|
The letter of engagement of White & Case LLP dated on or about the date hereof.
|
|
19
|
|
(i)
|
5pm (CET) on 30 June 2017; and
|
(ii)
|
following the occurrence of a Deferral Date Event which is continuing, the time and date at which the Agent (acting on the instructions of the Required Majority) issues a notice in writing to the Parent specifying the Deferral Date Event and stating that the Deferral Date has occurred and is continuing.
|
(i)
|
failure to meet any of the Milestones within the period relevant to that Milestone specified in paragraph 4(a) of this letter as the same is extended by the applicable grace period referred to in that paragraph and as the same may be amended by the Agent;
|
(ii)
|
breach of any of the Undertakings, provided that it shall not be a Deferral Date Event if such breach is capable of remedy and is remedied within 15 calendar days of such breach (except any breach of the Undertaking as set out in paragraph 4(k));
|
(iii)
|
the occurrence of the final maturity date under any of the Group Facility Agreements as the same may be amended in accordance with the terms of the relevant Group Facility Agreement;
|
(iv)
|
any extension letter with respect to a Maturing Facility Agreement is terminated in accordance with its terms;
|
(v)
|
subject only to any applicable grace period provided under the respective finance documents in respect of any Financial Indebtedness of any member of the Group, any Event of Default occurs and is continuing or any other actual event of default or termination event (however described) occurs and is continuing in respect of any Financial Indebtedness of any member of the Group where the aggregate amount of any such Financial Indebtedness outstanding is equal to or more than USD25,000,000 (or its equivalent in other currencies); and
|
(vi)
|
the occurrence of any enforcement action by or on behalf of any creditor in respect of any Financial Indebtedness of any member of the Group where the aggregate amount of any such Financial Indebtedness is equal to or more than USD25,000,000 (or its equivalent in other currencies).
|
(i)
|
the Parent (for itself and as the Obligors’ agent pursuant to clause 2.3 (
Parent’s Authority
) of the Facility Agreement) has acknowledged and agreed to the terms set out in this letter; and
|
(ii)
|
the Agent has given notification to the Parent and the Lenders under paragraph 3 of this letter; and
|
|
20
|
|
(iii)
|
amendments substantially equivalent to those set out in schedule 1 (
Amendments to the Facility Agreement
) to this letter have become effective in each of the other Group Facility Agreements, in each case ignoring for these purposes any condition to which those substantially equivalent amendments are subject relating solely to those substantially equivalent amendments becoming effective in relation to other Group Facility Agreements.
|
(i)
|
Financial Support existing on the Request Date provided, procured, created or permitted to subsist by any member of the Group to or for the benefit of any person other than a member of the Group or a member of the Minority Holding Group; and
|
(ii)
|
Financial Support (which shall be deemed to include for the purposes of this paragraph (ii) only any equity or similar investment, asset contribution or acquisition of shares or other equity investments) existing on the Request Date provided, procured, created or permitted to subsist by any member of the Group to or for the benefit of any member of the Minority Holding Group,
|
(i)
|
Seadrill Partners LLC;
|
(ii)
|
Archer Limited;
|
(iii)
|
Seamex Ltd.;
|
(iv)
|
Seabras Sapura Participacoes Limitida;
|
(v)
|
Seabras Sapura Holding GmbH;
|
(vi)
|
Camburi Drilling BV;
|
(vii)
|
Itaunas Drilling BV;
|
|
21
|
|
(viii)
|
Sahy Drilling BV; and
|
(ix)
|
Sapurakencana Petroleum Berhad,
|
(i)
|
is made by a member of the Group from a member of the Group;
|
(ii)
|
arises pursuant to the provision of Permitted Financial Support (other than under paragraph (v) of the definition thereof);
|
(iii)
|
is the incorporation of a company with limited liability which on incorporation becomes a member of the Group or the acquisition of a shelf company having no material assets or liabilities at the time of acquisition;
|
(iv)
|
arises pursuant to the joint venture arrangements described in paragraph (iii) of the definition of Permitted Newbuild Contract Payments; or
|
(v)
|
arises pursuant to any legally binding obligation, commitment or arrangement existing on the Request Date.
|
(i)
|
of trading stock or cash made by any member of the Group in the ordinary course of business of the disposing entity and not otherwise restricted by the terms of this letter or the Facility Agreement;
|
(ii)
|
of any asset by a member of the Group to another member of the Group;
|
(iii)
|
of assets in exchange for other assets (other than drilling units or shares) comparable or superior as to type, value and quality;
|
(vi)
|
of obsolete or redundant vehicles, plant and equipment for cash;
|
(v)
|
of cash equivalent investments for cash or in exchange for other cash equivalent investments;
|
(vi)
|
subject to the prior consent of the Required Majority and the Required Lenders, Required Majority or Majority Lenders (as therein defined) under each other Group Facility Agreement, of the Drilling Unit or “Drilling Unit”, “Drilling Rig”, “Drillship”, “Collateral Rig” or “Rig” (as such term is defined in any of the Group Facility Agreements) on terms which would not be prohibited (A) with respect to the Drilling Unit, under the Facility Agreement or, (B) with respect to any “Drilling Unit”, “Drilling Rig”, “Drillship”, “Collateral Rig” or “Rig”, under the Group Facility Agreement relating to the relevant “Drilling Unit”, “Drilling Rig”, “Drillship”, “Collateral Rig” or “Rig”;
|
|
22
|
|
(vii)
|
of the Rigel drilling vessel, rig or other drilling unit, or the shares in the joint venture company which may acquire the same (as described in paragraph (iii) of the definition of Permitted Newbuild Contract Payments) on arm’s length terms and for what the Parent acting reasonably considers to be fair market value or as otherwise required by the terms of the joint venture agreement;
|
(viii)
|
of any asset forming part of the capital equipment pool operated by Seadrill Global Services Limited to any member of the Minority Holding Group consistent with the normal basis on which this capital equipment pool has previously been operated;
|
(ix)
|
the application of cash not otherwise prohibited by this letter or the Finance Documents;
|
(x)
|
the granting of any licence of intellectual property or lease or licence in each case in the ordinary course of trading;
|
(xi)
|
of shares in Sapurakencana Petroleum Berhad on arm’s length terms;
|
(xii)
|
consented to by the Required Majority; and
|
(xiii)
|
of assets for cash where the net consideration receivable (when aggregated with the net consideration receivable for any other sale, lease, licence, transfer or other disposal not allowed under the preceding paragraphs) does not exceed USD25,000,000 (or its equivalent in other currencies) in total during the Negotiation Period.
|
(i)
|
is Existing Financial Indebtedness;
|
(ii)
|
is or arises under or pursuant to any Permitted Financial Support (other than under paragraph (v) of the definition thereof);
|
(iii)
|
is owed by one member of the Group to another member of the Group;
|
(iv)
|
is or arises under any obligation in respect of Financial Indebtedness of one or more members of the Group which is assumed by or transferred or novated to another member of the Group;
|
(v)
|
is an amount of any liability under an advance or deferred purchase agreement if the agreement is in respect of the supply of assets or services in the ordinary course of trading;
|
(vi)
|
arises from the endorsement of negotiable instruments in the ordinary course of trading;
|
(vii)
|
arises from any netting, setting off, multi-account overdraft, group cash pool or group cash management arrangements existing as at the Request Date (as amended, varied or supplemented);
|
(viii)
|
arises under any derivative or hedging transaction entered into in the ordinary course of business and which is for hedging purposes and not of a speculative nature;
|
(ix)
|
is in the form of customer deposits and advance payments received in the ordinary course of trading from customers for services purchased in the ordinary course of trading;
|
(x)
|
arises from the honouring by a bank or other financial institution of a cheque, draft or similar instrument inadvertently drawn against insufficient funds in the ordinary course of trading (provided that such Financial Indebtedness is extinguished within ten Business Days);
|
(xi)
|
is consented to by the Required Majority; or
|
|
23
|
|
(xii)
|
is not permitted by the preceding paragraphs and the outstanding principal amount of which does not exceed (A) for the period from the Request Date to and including the 30 September 2016 USD25,000,000 (or its equivalent in other currencies), and (B) for the period from 30 September 2016 USD50,000,000 (or its equivalent in other currencies) in each case in aggregate for the Group at any time.
|
(i)
|
the Existing Financial Support Arrangements, subject to paragraph 4(k) of this letter;
|
(ii)
|
any Financial Support which is provided, procured, created or permitted to subsist by any member of the Group to another member of the Group;
|
(iii)
|
any Financial Support which is provided, procured, created or permitted to subsist in the ordinary course of business in respect of the performance by a member of the Group of its obligations under any contract, agreement, deed, law, regulation or other legally binding arrangement (other than obligations which constitute Financial Indebtedness);
|
(iv)
|
any Financial Support which is provided, procured, created or permitted to subsist in respect of the netting or set-off of debit and credit balances of members of the Group (including as part of multi-account overdraft, group cash pool or group cash management arrangements) constituting Permitted Security;
|
(v)
|
Financial Support constituting Permitted Financial Indebtedness (other than under paragraph (ii) of the definition thereof) or a Permitted Acquisition (other than under paragraph (ii) of the definition thereof);
|
(vi)
|
any Financial Support which is provided, procured, created or permitted to subsist in the ordinary course of trading of any member of the Group;
|
(vii)
|
any Financial Support consented to by the Required Majority;
|
(viii)
|
subject to paragraph 4(k) of this letter, any Financial Support (which shall be deemed to include for the purposes of this sub-paragraph (viii) only any equity or similar investment, asset contribution or acquisition of shares or other equity investments) which is provided, procured, created or permitted to subsist by any member of the Group to or for the benefit of Seamex Ltd. and/or any of Seamex Ltd.’s Subsidiaries (including by the extension of the availability of Existing Financial Support Arrangements) in an aggregate amount at any time not exceeding by more than USD101,000,000 (or its equivalent in other currencies) the aggregate amount of Existing Financial Support Arrangements to or for the benefit of Seamex Ltd. or Seamex Ltd.’s Subsidiaries as at the Request Date;
|
(ix)
|
subject to paragraph 4(k) of this letter, Financial Support which is provided, procured, created or permitted to subsist in connection with the replacement, refinancing, amendment, extension or (in the case of the Rubi Guarantees, as defined below) issuance of bank guarantees and letters of credit, including (A) the irrevocable standby letter of credit issued by Nordea Bank AB in support of the obligations of Sapura Onix GmbH in an amount of USD 7,531,358 dated 17 April 2015, (B) the irrevocable standby letter of credit issued by Nordea Bank AB in support of the obligations of Sapura Onix GmbH in an amount of USD 3,832,252.44 dated 17 April 2015, (C) the irrevocable standby letter of credit issued by Danske Bank in support of the obligations of Sapura Topiazo GmbH in an amount of USD 8,582,659, (D) the irrevocable standby letter of credit issued by Citibank in support of the obligations of Sapura Diamante GmbH in an amount of USD 8,645,507, (E) the irrevocable standby letter of credit issued by Citibank in support of the obligations of Sapura Diamante GmbH in an amount of USD 4,500,911, (F) the irrevocable standby letter of credit issued by Danske Bank in support of the obligations of Sapura Topiazo GmbH in an amount of USD 4,836,103, (G) the irrevocable standby letter of credit issued by Standard Chartered in support
|
|
24
|
|
(x)
|
Financial Support not permitted by the preceding paragraphs and the outstanding amount of which does not exceed USD25,000,000 (or its equivalent in other currencies) in aggregate for the Group at any time.
|
(i)
|
any payments in respect of stacking costs;
|
(ii)
|
any payments to delay delivery provided that the Parent uses its reasonable endeavours to keep these to a minimum taking into account the Group’s exposure under the relevant Newbuild Contract and related Newbuild Contracts;
|
(iii)
|
any costs and expenses in respect of Newbuild Contracts between (1) the Dalian Shipbuilding Industry Offshore Co Ltd and any of Seadrill Titan Ltd, Seadrill Proteus Ltd, Seadrill Rhea Ltd, Seadrill Tethys Ltd, Seadrill Hyperion Ltd, Seadrill Umbriel Ltd, Seadrill Dione Ltd or Seadrill Mimas Ltd, or (2) the Jurong Shipyard Pte Ltd and North Atlantic Rigel Ltd in each case provided that such costs and expenses relate to the entering into of a joint venture agreement between the relevant entity and Dalian Shipbuilding Industry Offshore Co Ltd (or associated person thereof) or Jurong Shipyard Pte Ltd (or associated person thereof), as applicable with respect to the relevant drilling vessel, rig or other drilling unit and not, for the avoidance of doubt, the payment of any additional or final instalments with respect to such Newbuild Contracts;
|
(iv)
|
subject to paragraph 4(k) of this letter, any payment made pursuant to any legally binding contractual term of any Newbuild Contract existing as at the Request Date; and
|
(v)
|
any payment consented to by the Required Majority.
|
(i)
|
any Existing Security;
|
(ii)
|
any rights of set-off arising in respect of any member of the Group in the ordinary course of its trading and not securing Financial Indebtedness;
|
(iii)
|
any lien arising by operation of law and in the ordinary course of business and not as a result of any default or omission by any member of the Group;
|
(iv)
|
any Security Interest arising in connection with any unpaid Tax where the liability to pay such Tax is being contested in good faith by appropriate proceedings;
|
(v)
|
any Security Interest arising under any court order or injunction or for costs arising in connection with any litigation or court proceedings being contested by any member of the Group in good faith;
|
|
25
|
|
(vi)
|
any netting or set-off arrangement entered into by any member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances of members of the Group (including as part of any multi-account overdraft, group cash pool or group cash management arrangements);
|
(vii)
|
any payment or close out netting or set-off arrangement pursuant to any derivative or hedging transaction entered into by any member of the Group which constitutes Permitted Financial Indebtedness;
|
(viii)
|
any collateral provided on customary market terms in respect of any member of the Group’s obligations under any derivative or hedging transaction which constitutes Permitted Financial Indebtedness entered into after the Request Date the amount of which does not exceed USD 25,000,000 (or its equivalent in any other currency or currencies) at any time;
|
(ix)
|
any Security Interest arising under any retention of title, hire purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied to any member of the Group in the ordinary course of business and on the supplier’s standard or usual terms and not arising as a result of any default or omission by any member of the Group;
|
(x)
|
any Permitted Encumbrance permitted to subsist or arise under the Facility Agreement, or “Permitted Encumbrance” permitted to subsist or arise under or pursuant to and as such term is defined in any of the Group Facility Agreements, provided that such Permitted Encumbrance or “Permitted Encumbrance” is permitted to subsist or arise pursuant to the terms of the Facility Agreement or relevant Group Facility Agreement (as applicable) over an asset owned immediately prior to the creation of the relevant Security Interest by an Obligor (other than the Parent) under the Facility Agreement or an “Obligor” (other than the Parent) under the terms of the relevant Group Facility Agreement;
|
(xi)
|
any Security Interest which is consented to by the Required Majority; and
|
(xii)
|
any Security Interest securing indebtedness the outstanding principal amount of which (when aggregated with the outstanding principal amount of any other indebtedness which has the benefit of any Security Interest given by any member of the Group other than any permitted under the paragraphs above) does not exceed USD25,000,000 (or its equivalent in other currencies) at any time.
|
|
26
|
|
|
27
|
|
Name of the Company
|
Jurisdiction of
Incorporation
|
Principal Activities
|
Seabras Rig Holdco Ltd
|
Hungary
|
Rig owner
|
Seadrill Auriga Hungary Kft
|
Hungary
|
Rig owner
|
Seadrill Canada Ltd
|
Canada
|
Operating company
|
Seadrill Capricorn Holdings LLC
|
Marshall Islands
|
Holding company
|
Seadrill China Operations Ltd
|
Luxembourg
|
Rig owner
|
Seadrill Deepwater Drillship Ltd
|
Cayman Islands
|
Rig owner
|
Seadrill Ghana Operations Ltd
|
Bermuda
|
Operating company
|
Seadrill Gulf Operations Auriga LLC
|
U.S.A.
|
Operating company
|
Seadrill Gulf Operations Sirius LLC
|
U.S.A.
|
Operating company
|
Seadrill Gulf Operations Vela LLC
|
U.S.A.
|
Operating company
|
Seadrill Hungary Kft
|
Hungary
|
Rig owner
|
Seadrill International Ltd
|
Hong Kong
|
Operating company
|
Seadrill Leo Ltd
|
Bermuda
|
Rig owner
|
Seadrill Mobile Units Ltd
|
Nigeria
|
Service company
|
Seadrill Operating LP
|
Marshall Islands
|
Holding company
|
Seadrill Operating GP LLC
|
Marshall Islands
|
Holding company
|
Seadrill Operating LLC
|
Marshall Islands
|
Holding company
|
Seadrill Partners Operating LLC
|
Marshall Islands
|
Holding company
|
Seadrill Polaris Ltd.
|
Bermuda
|
Rig Owner
|
Seadrill T15 Ltd
|
Bermuda
|
Rig owner
|
Seadrill T16 Ltd
|
Bermuda
|
Rig owner
|
Seadrill US Gulf LLC
|
U.S.A.
|
Operating company
|
Seadrill Vela Hungary Kft
|
Hungary
|
Rig owner
|
Seadrill Vencedor Ltd
|
Bermuda
|
Rig owner
|
a.
|
3.25
per cent per annum; and
|
b.
|
From and including 1 July 2015 until the Reinstated Leverage Ratio Covenant Date, the Step-up Margin (if applicable)
.”
|
a.
|
for the period from and including the financial quarter starting on 1 July 2015 until and including the financial quarter ending on 30 September 2016; 6.0:1;
|
b.
|
for the period from and including the financial quarter starting on 1 October 2016 until and including the financial quarter ending on 31 December 2016; 5.5:1; and
|
c.
|
for the period prior to 1 July 2015 and for the period from and including the earlier of (i) the financial quarter starting on 1 January 2017 or (ii) such earlier date on which the Borrower (at its discretion) notifies the Agent of a reset of the Leverage Ratio covenant to 4.5:1 (the “
Reinstated Leverage Ratio Covenant Date
”) until the end of the term of this Agreement; 4.5:1.”
|
1.
|
The acknowledgement and agreement by the Parent of the terms set out in this Consent Letter.
|
2.
|
No other lenders and/ or other financial institutions in any other facilities are granted higher compensation or more favourable terms than what is granted to the Finance Parties in the Consent Letter. By the Parent’s agreement to this Consent Letter the Parent agrees that if, subsequent to this Consent Letter becoming effective, higher compensation or more favourable terms are granted to any other lenders and/ or other financial institutions in any other facilities that are not already set out in the Leverage Ratio Request, the Parent will enter into such documents as the Agent may require in order to reflect such higher compensation or more favourable terms in this Consent Letter.
|
3.
|
The Parent’s undertaking to the Agent on behalf of the Finance Parties, which shall be considered given by its acceptance of this Consent Letter, that from and including 1 July 2015 and until the Reinstated Leverage Ratio Covenant Date the Parent shall, irrespective of any term of the Finance Documents to the contrary, not make any dividend payments, enter into new total return swaps (for the avoidance of doubt, excluding roll-over of existing total return swaps) or enter into similar transactions with similar effect or buy back any shares
|
a.
|
The Borrower will pay a fee to the Lenders and financial institutions who approve the terms of the Leverage Ratio Request within the timeframe, of 5 basis points calculated on the lenders’ available and outstanding Commitment.
|
b.
|
The fee set out in this Clause 3 shall be payable within 5 Business Days of the later of (i) the Agent signing this Consent letter and (ii) the Parent’s acknowledgement of the same.
|
The Agent (on behalf of the Lenders):
|
|
Citibank International Limited
|
By:
/s/ Steve Wright
|
Name: Steve Wright
|
Title: Vice President
|
|
The Parent (on behalf of itself and as the Obligors’ agent pursuant to Clause
2.4
(
Parent’s Authority
) of the Loan Agreement:
|
|
Seadrill Limited
|
By:
/s/ Jonas Ytreland
|
Name: Jonas Ytreland
|
Title: VP Treasury and Financing
Seadrill Management Ltd
|