Keppel Offshore & Marine Limited (Keppel O&M) has through its wholly-owned subsidiary, Keppel FELS Limited (Keppel FELS), signed a Master Agreement with Borr Drilling Limited (Borr Drilling) for the sale of five jackup rigs for a total value of approximately US$745m.
These are existing jackup rigs which are currently being built by Keppel FELS to the KFELS B class designs.
The total price of the five rigs excludes any down payments made by the respective original owners.
The Master Agreement will become effective upon the satisfaction of certain conditions, including Borr Drilling raising sufficient funds, and the relevant sales and purchase agreements for the individual rigs having been entered into.
Borr Drilling will pay a first instalment of US$288 million within 20 business days of the effective date of the Master Agreement and the remaining amounts are payable within five years from the respective delivery dates of each individual rig, on a seller's credit with interest at market rates.
The rigs are scheduled to be delivered progressively from 4Q 2019 to 4Q 2020, with one rig to be delivered in 2019 and four rigs in 2020.
Mr Chris Ong, CEO of Keppel O&M said, "The agreement with Borr Drilling demonstrates that rig owners continue to look for reliable, high quality rigs, such as the KFELS B Class, to maximise efficiency and productivity. This is a win-win agreement for all parties and enables Keppel O&M to further improve our cashflow, minimise the holding risks of the projects, and clear several of the deferred orders. We look forward to providing Borr Drilling with another five premium, safe and cost-efficient rigs and continuing our strong partnership."
CEO of Borr Drilling, Mr Svend Anton Maier, added, "We are pleased to be getting another five high quality jackup rigs from Keppel FELS on top of the five we acquired earlier. Our partnership with Keppel is crucial as it enables us to provide the market with the latest in jackup rig technology, safety and operability. This is an opportune time for us to grow our fleet of highly capable jackup rigs as the market is showing signs of recovery from the bottom of the business cycle."
The above transaction is not expected to have a material impact on the net tangible assets or earnings per share of Keppel Corporation Limited for the current financial year. It is not expected to result in any write-downs on the projects.
A further announcement will be made when the transaction is effective.