ORIG TL B 1L USD, ORIG TL B1 1L USD

Ocean Rig UDW Inc.

Credit, Industrial/Transportation, Event Driven/Special Sit, Energy


Publicly traded companies mentioned herein: Atwood Oceanics Inc (ATW), Ensco PLC (ESV), Ocean Rig UDW Inc (ORIG), Petroleo Brasileiro SA (PBR), Songa Offshore (SONG NO), Transocean Ltd (RIG)

Highlights

The presenter is long Ocean Rig’s Term Loans at 68 (ORIG TL B1 1L USD) and 85 (ORIG TL B 1L USD). The George Economou-led offshore drilling company, which filed for Chapter 15 bankruptcy protection in late-March (2017), specializes in ultra-deepwater and harsh environment drilling, which has suffered in the wake of oil’s collapse as major oil producers have shied away from expensive offshore projects. Based on his model and a review of recent transactions, including Transocean+Songa and Ensco+Atwood, it appears as though the market is valuing Ocean Rig’s drillships at just $130mm per rig, which is a substantial discount to the value of “just the steel ($200-250mm).” Thus, he believes the company is a potentially attractive acquisition target, and the Term Loans offer investors a favorable risk/ reward opportunity.

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Idea Discussion

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