Item 1.01Entry into a Material Definitive Agreement
Indenture Relating to the Senior Guaranteed Exchangeable Bonds
On August 14, 2020, in connection with the closing of the previously announced private exchange (the “Exchange”), Transocean Inc. (the “Company”), a wholly-owned subsidiary of Transocean Ltd. (the “Parent” and, together with the Company, “Transocean”), issued $237,933,000 original principal amount of new 2.5% Senior Guaranteed Exchangeable Bonds due 2027 (the “Senior Guaranteed Exchangeable Bonds”) in exchange for $396,556,000 aggregate principal amount of the Company’s outstanding 0.5% Exchangeable Senior Bonds due 2023 (the “Existing Exchangeable Bonds”). The Senior Guaranteed Exchangeable Bonds are guaranteed by the Parent and three indirect holding company subsidiaries of the Company: Transocean Mid Holdings 1 Limited (“Mid Holdings 1”), Transocean Mid Holdings 2 Limited (“Mid Holdings 2”) and Transocean Mid Holdings 3 Limited (“Mid Holdings 3”, and collectively with Mid Holdings 1 and Mid Holdings 2, the “Structurally Senior Guarantors”). The Senior Guaranteed Exchangeable Bonds were issued pursuant to an Indenture, dated August 14, 2020, between the Company, the Parent and the Structurally Senior Guarantors, as guarantors, and Wells Fargo Bank, National Association, as trustee (the “Indenture”). The Company did not receive any cash proceeds from the issuance of the Senior Guaranteed Exchangeable Bonds.
The terms of the Senior Guaranteed Exchangeable Bonds are governed by the Indenture, which contains covenants that, among other things, limit the Company’s ability to allow its subsidiaries to incur certain additional indebtedness, incur certain liens on its drilling rigs or drillships without equally and ratably securing the Senior Guaranteed Exchangeable Bonds, engage in certain sale and lease-back transactions covering any of its drilling rigs or drillships and consolidate, merge or enter into a scheme of arrangement qualifying as an amalgamation. The Indenture also contains customary events of default. Indebtedness under the Senior Guaranteed Exchangeable Bonds may be accelerated in certain circumstances upon an event of default as set forth in the Indenture.
The Senior Guaranteed Exchangeable Bonds will have an initial exchange rate of 162.1626 shares of the Parent’s common shares, par value 0.10 Swiss francs per share (“Common Shares”), per $1,000 original principal amount, subject to adjustment, and will be convertible into Common Shares.
In the event of a “fundamental change” (as defined in the Indenture), holders of the Senior Guaranteed Exchangeable Bonds may require the Company to repurchase all or any portion of their Senior Guaranteed Exchangeable Bonds for cash at a repurchase price equal to 101% of the principal amount of such Senior Guaranteed Exchangeable Bonds on the fundamental change repurchase date, plus accrued and unpaid interest, if any, to, but excluding, such repurchase date. In the event of a “listing failure event” or a “tax event” (both as defined in the Indenture), holders of the Senior Guaranteed Exchangeable Bonds may require the Company to repurchase all or any portion of their Senior Guaranteed Exchangeable Bonds for cash at a repurchase price equal to 100% of the principal amount of such Senior Guaranteed Exchangeable Bonds on the repurchase date, plus accrued and unpaid interest, if any, to, but excluding, such repurchase date.
The description above does not purport to be complete and is qualified in its entirety by the Indenture, which is filed herewith as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Amendment to Registration Rights Agreement
On August 14, 2020, in connection with the Exchange, the Company amended its existing registration rights agreement dated January 30, 2018 to reflect, among other things, that certain of the Parent’s Shares issuable upon the exchange of the Senior Guaranteed Exchangeable Bonds will be subject to registration rights (the “Amendment to Registration Rights Agreement”).
