Ocean Rig UDW Inc (NASDAQ:ORIG)
Ocean Rig UDW is having an incredible day in the market today, and for good reason. The company has been dealing with massive financial issues as of late, leading to concerns with regard to bankruptcy. However, in a move, the company amended a credit agreement, leading to hopes of other options. Today, we’ll talk about the news, how the market reacted to the news, and what we can expect to see from ORIG ahead.
ORIG Amends Credit Agreement
As mentioned above, Ocean Rig is having an incredibly strong day in the market today after a release that happened late in the day yesterday. In the release, we learned that the company has amended an agreement with Apollo credit. One of the big key factors in this agreement is that drillship ownership is being transferred to a trustee.
As a result of the agreement, the company is now released from a key loan guarantee. The agreement also leads to a reduction in the mandatory prepayment under the agreement. Unfortunately, the amount of the reduction has yet to be disclosed. Due to the fact that drillship ownership is being transferred and loans prepayment requirements are being reduced, there’s renewed hopes that ORIG will be able to avoid bankruptcy. Here’s a key snippet from the SEC filing announcing the news…
“…the Company has entered into an amending and restating agreement, dated August 31, 2016 (the “Amending and Restating Agreement”), to amend and restate the secured term loan facility agreement, entered into on February 13, 2015, by and among Drillship Alonissos Shareholders Inc., a wholly owned subsidiary of the Company, as Borrower, a syndicate of lenders and DNB Bank ASA, as facility agent and security agent, for up to $475.0 million to partially finance the Ocean Rig Apollo (the “Loan Agreement”).
Pursuant to the Amending and Restating Agreement, (NYSE:I) the Company has been released from its guarantee under the Loan Agreement, (ii) the amount of mandatory prepayment required to be made due to the termination of drilling contract for the Ocean Rig Apollo with Total E&P Congo has been reduced, (NASDAQ:III) the ownership of the Borrower and Drillship Alonissos Owners Inc., as owner of the Ocean Rig Apollo, has been transferred from the Company to a trustee, and (iv) the Company has been given an option to purchase the shares of Drillship Alonissos Owners Inc. upon satisfaction of certain conditions.”