Paragon Offshore Limited announced that it has signed a Tender Offer Agreement with Borr Drilling Limited, a public limited company incorporated under the laws of Bermuda and listed on the Oslo Stock Exchange, pursuant to which, on the terms and subject to the conditions thereof, Borr has agreed to commence a tender offer to acquire all of the outstanding shares of the company at a purchase price of $42.28 per Share.
Borr is expected to commence the Offer on February 26, 2018 and the Offer will remain open for 20 business days. The Offer Period is expected to expire at 12:01 A.M. Eastern Time on March 24, 2018, unless extended. The transaction is expected to close on March 26, 2018, subject to the satisfaction of the Offer conditions. The members of the company will receive detailed information regarding the terms of the Offer in an Offer to Purchase and related materials, including a letter of transmittal and a disclosure statement to be disseminated by Borr and Paragon on the date of commencement of the Offer.
Jay Swent, Paragon’s President and Chief Executive Officer, said, “We believe this is an excellent outcome for Paragon’s stakeholders. Although Paragon is well positioned to manage through the cycles of the intensely competitive offshore drilling industry, this opportunity minimizes the risk of the investment outcome for our stakeholders at an attractive price. I am proud of our highly qualified and dedicated employees, our assets, and our well-deserved reputation for operational excellence, industry-leading safety and uptime performance, and customer service, all of which are important value drivers in this transaction.”
Terms of the Tender Offer Agreement
Under terms of the Tender Offer Agreement, each Shareholder of Paragon will receive, for each outstanding Share validly tendered and not properly withdrawn in the Offer, subject to reduction for any applicable withholding taxes in respect thereof, cash in an amount equal to US $42.28 per Share.
The Offer will be subject to a number of conditions, including, among other customary conditions, that (a) at least 3,361,763 Shares, representing at least 67% of the outstanding Shares have been validly tendered and not withdrawn before the Expiration Date, (b) that no material adverse change shall have occurred prior to closing, and (c) the condition that Paragon shall have completed all actions necessary to acquire ownership of certain Prospector drilling rigs and legal entities currently subject to chapter 11 proceedings in the United States Bankruptcy Court in the District of Delaware. The Offer is not subject to a financing condition.
In connection with, and as a condition to Borr’s willingness to enter into and perform its obligations under the Tender Offer Agreement, Borr entered into individual tender support agreements (each, a “ Tender Support Agreement”), with certain Shareholders of Paragon (the “ Tendering Shareholders”). Subject to the terms and conditions of the Tender Support Agreements, the Tendering Shareholders have agreed, among other things, to irrevocably tender all of their Shares pursuant to the Offer. The Tendering Shareholders beneficially own, in the aggregate, 3,407,072 Shares, representing approximately 67.9% of the total outstanding Shares as of February 21, 2018.
Paragon does not anticipate that the transaction will have any impact on shares of Paragon’s Litigation Trust Agreement or the ongoing litigation against Noble Corporation. Paragon expects that its term loan agreement will be repaid in full and terminated at the closing of the transactions. The Tender Offer Agreement does not obligate Borr to conduct a back-end merger following such closing.
Shareholders who tender their Shares in the Offer will also receive from Borr cash in an amount equal to a pro rata portion of any proceeds received by Paragon, on or before the day prior to the day on which the Borr accepts for payment and pays for all Shares tendered and not validly withdrawn, under an arbitration award against a certain third party.
On February 15, 2018 Paragon Offshore plc (in administration) (“ Old Paragon”) entered into a consensual settlement agreement (the “ Settlement Agreement”) with SinoEnergy Capital Management, Ltd. ( “ SinoEnergy ”). Under the terms of the Settlement Agreement, SinoEnergy will be paid certain agreed amounts (the “ Settlement Amounts”) totaling approximately $135 million, representing the outstanding principal balance on the existing sale-leaseback arrangements with SinoEnergy, lease termination fees, expenses, and a consent fee, in exchange for which SinoEnergy will cause ownership of the two Prospector rigs to be transferred to Paragon. Paragon expects to complete the Prospector bankruptcy court proceedings as a part of and in connection with the Offer.
Vinson & Elkins LLP is serving as legal advisor and Deutsche Bank Securities Inc. is serving as financial advisor to Paragon.