Ocean Rig launches master limited partnership with eye on $300m IPO - 15/10/2014

OCEAN Rig, the offshore drilling company majority-owned by George Economou-led DryShips, has launched plans to float a spin-off master limited partnership, Ocean Rig Partners.

The new partnership, or Opco, will start with an initial fleet of three of Ocean Rig’s Samsung-built seventh generation ultra-deepwater drillships delivered in the last year.

The Ocean Rig Mylos, the Ocean Rig Skyros and the Ocean Rig Athena are employed with affiliates of major oil companies, including Repsol, Total and ConocoPhillips, with average remaining employment of about 3.7 years.

Opco will have options to purchase another four drillships and two semi-submersible rigs owned by Ocean Rig, its sponsor, and rights to acquire any future newbuilding or secondhand acquisitions made by Ocean Rig, including four new drillships it has contracted from Samsung for delivery between 2015 and 2017.

According to a preliminary public prospectus filed with regulators, Opco plans to grow through dropdowns from its sponsor or acquisitions from third parties.

The prospectus indicates a maximum offering target of $305m. Barclays, BofA Merrill Lynch, Credit Suisse and Deutsche Bank Securities have been named as lead underwriters for the planned offering.

Ocean Rig investors are likely to welcome news of the MLP, which has been awaited for some time.

The drilling company’s stock price has been falling on Nasdaq, while shares in parent DryShips plunged by 21% on Monday after the bulker and tanker owner pulled a bond offering intended to plug its shortfall for refinancing a convertible $700m issue that comes due on December 1.

The bond would have been backed by Ocean Rig shares.

DryShips has lined up $350m from ABN Amro and a credit line of $100m from Nordea Bank, but needs to raise another $350m, it is understood.

When it set out on the bond trail in September the high-yield market appeared promising but markets have abruptly soured and the deal was eventually deemed not in the best interests of shareholders.

Sources close to the company told Lloyd’s List that the offering was fully subscribed but the terms were “a disaster”. It is thought that the pricing was higher than 12.5%.

One source said that the company was keeping its options open but that additional funding was likely to be made up with “smaller pieces”.

DryShips was considering various types of funding including straight equity raising, convertibles and loans, he said.

in www.lloydslist.com 15/10/2014