Ensco plc (NYSE:ESV) Files An 8-K Entry into a Material Definitive AgreementItem 7.01. Entry into a Material Definitive Agreement.
On October3, 2017, Ensco plc (“Ensco”), Pride International LLC, certain other subsidiaries of Ensco party thereto, Citibank, N.A., as administrative agent, and the lenders party thereto entered into a Commitment Agreement and Fifth Amendment to Fourth Amended and Restated Credit Agreement (the “Amendment”), amending Ensco’s Fourth Amended and Restated Credit Agreement, dated as of May7, 2013 (as previously amended, the “Existing Credit Agreement”, and the Existing Credit Agreement as amended by the Amendment, the “Credit Agreement”). The Amendment became effective on October6, 2017 following (i)the completion of the acquisition by Ensco of Atwood Oceanics,Inc. (“Atwood”) and (ii)the repayment and termination of Atwood’s credit facility and the redemption of $449 million aggregate principal amount of Atwood’s senior notes at the closing of the acquisition.
The Amendment provides for, among other things (i)$2,002,500,000 in aggregate commitments until September30, 2019 and $1,241,750,000 in aggregate commitments until September30, 2022 (the “Extended Commitments”), with the option to increase the aggregate Extended Commitments to an amount up to $1,500,000,000, subject to customary consents and conditions, (ii)modification of general secured debt basket capacity such that the company will be permitted to raise secured debt up to the lesser of $750 million and 10% of Consolidated Tangible Net Worth (as defined in the Credit Agreement), (iii)restrictions on borrowings if, after giving effect to any such borrowings and the application of the proceeds thereof, the aggregate amount of Available Cash (as defined in the Credit Agreement) would exceed $150,000,000, (iv)guarantees from certain of Ensco’s rig-owning subsidiaries sufficient to meet certain guarantee coverage ratios specified in the Credit Agreement, and (v)a covenant restricting the ability of Ensco to increase quarterly dividend payments in excess of $0.01 per share.
The Amendment also includes a covenant restricting Ensco’s ability to repay indebtedness maturing outside the latest maturity date of the Credit Agreement. This covenant is subject to certain exceptions that permit Ensco to manage its balance sheet, including the ability to make repayments of indebtedness (i)of acquired companies within 90 days of the completion of the acquisition or (ii)if, after giving effect to such repayments, Available Cash is greater than $250 million and there are no amounts outstanding under the Credit Agreement.
After giving effect to the Amendment, Ensco will maintain its ability to incur or refinance indebtedness of acquired companies subject to certain conditions including maintaining pro forma compliance with its debt to capitalization ratio and guarantee coverage ratios.
After giving effect to the Amendment, the annual interest rate on each base rate borrowing will be (i)the greatest of (x)the administrative agent’s publicly-announced base rate, (y)the Federal Funds Effective Rate (as defined in the Credit Agreement) plus 0.5% and (z)LIBOR for a one-month interest period on such day plus 1.00%, plus (ii)a margin between 1.75% and 3.25% depending on Ensco’s then-current credit ratings. The interest rate on each eurodollar loan will be LIBOR for the applicable interest period plus a margin between 2.75% to 4.25% depending on Ensco’s then-current credit ratings.
The Amendment is filed as Exhibit10.1 to this Current Report on Form8-K and is incorporated by reference herein. The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the Amendment.
Item 7.01 Completion of Acquisition or Disposition of Assets.
On October6, 2017 (the “Closing Date”), Ensco consummated the transactions contemplated by that certain Agreement and Plan of Merger, dated as of May29, 2017 (the “Merger Agreement”), by and among Ensco, Echo Merger Sub LLC, a wholly owned subsidiary of Ensco (“Merger Sub”), and Atwood. to the Merger Agreement, Merger Sub merged with and into Atwood (the “Merger”), with Atwood continuing as the surviving company and becoming a wholly owned subsidiary of Ensco.
At the effective time of the Merger (the “Effective Time”), each share of Atwood common stock, par value $1.00 per share (the “Atwood Common Stock”) (other than shares of Atwood Common Stock held by Ensco, Merger Sub or Atwood), converted into the right to receive 1.60 validly issued, fully paid and nonassessable ClassA ordinary shares of Ensco, nominal value $0.10 per share (the “Ensco Shares”).
As of the Effective Time and to the terms of the Merger Agreement, (i)each award of Atwood restricted stock units, other than any Atwood restricted stock units that are required to be settled in cash, that were outstanding as of immediately prior to the Effective Time became fully vested and have been settled through the issuance to the holders thereof of Ensco Shares, (ii)each award of Atwood restricted stock units that was required to be settled in cash was treated in accordance with the terms of such award and (iii) each award of Atwood stock options that remained outstanding and unexercised immediately prior to the Effective Time converted into a stock option relating to Ensco Shares, in each case, in the manner previously disclosed.
