Billionaire John Fredriksen, already involved in tough talks to restructure the debt of Seadrill Ltd., is planning to register a new offshore rig company next week as he seeks to take advantage of depressed prices for the giant machines.
Northern Drilling, which is purely an investment company and not a rig operator, will be registered on the Norwegian over-the-counter market — making shares available to securities dealers — and a full public listing on the Oslo stock exchange is planned for later this year, a person familiar with the matter said Friday. Fredriksen has raised about $230 million in capital for the company, about half of which he contributed himself, the person said.
Northern Drilling has been set up following the purchase of the West Mira semi-submersible rig, which Fredriksen’s company Seatankers bought for $365 million as part of a settlement between Seadrill and Hyundai Heavy Industries Co. Ltd., said the person, who spoke on condition of anonymity because the information was private. Seatankers also secured an option to buy the Bollsta Dolphin rig from Hyundai for about $400 million and Fredriksen is looking for other units available at a discount amid an industry downturn, the person said.
Seadrill, of which Fredriksen is chairman, didn’t respond to an email and phone call seeking comment. Oslo-based newspaper TradeWinds reported on the planned Oslo listing and the rig purchases earlier this week.
Fredriksen, a Norwegian-born citizen of Cyprus, is currently engaged in complicated negotiations to restructure Seadrill’s debt. Offshore-rig owners have been battered since 2014 as oil companies cut spending to cope with a collapse in crude prices. Demand for drilling services dropped just as a wave of new rigs was hitting the market.
Seadrill, which bears the highest debt load in the industry, has lost about 95 percent of its market value since prices started falling. The company said last month it would be “challenging” to meet an April 30 deadline for talks with banks and bondholders to yield a solution, warning it could be forced to file for bankruptcy protection.
Northern Drilling will leave commercial and technical management of any rigs it owns to Seadrill, which had originally ordered the West Mira rig before canceling the contract. The objective is for Northern Drilling to sell its rigs at a profit in the future, and the intention is to give Seadrill the opportunity to match any future offer to acquire them, the person said.
Fredriksen, who made his fortune in shipping before venturing into offshore rigs and salmon farming a decade ago, has resorted to setting up new companies when he has encountered problems before. In 2011, he split his tanker company Frontline Ltd. in two, shifting 11 of his best ships and $666 million in debt into a new firm, Frontline 2012 Ltd.
Fredriksen’s move to also comes just months after his former top adviser, Tor Olav Troim, with whom he had a falling out in 2014, set up his own rig company, Borr Drilling Ltd. Borr has bought two jack-up rigs, registered in the OTC system and is reported to be close to buying 15 more machines from Transocean Ltd. for $1.2 billion.