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Rentech Secures Additional Loan Commitment of up to $63 Million from Blackstone’s GSO Capital Partners

LOS ANGELES–(BUSINESS WIRE)–

Rentech, Inc. (RTK) announced today that GSO Capital Partners LP (GSO), the credit investment arm of Blackstone, has increased its credit facility for Rentech by up to $63 million. The majority of the proceeds from this new facility are expected to fund completion of Rentech’s Canadian wood pellet projects through positive cash flow. Rentech now estimates the cost to complete the construction of its Canadian wood pellet projects to be $125 to $130 million.

“We appreciate the support GSO Capital Partners continues to provide us, this time in the form of additional term loans,” said Keith Forman, President and CEO of Rentech. “The task at hand remains clear–to complete the construction and commissioning of, and to place into service, our new pellet facilities in Canada. This will be done in as timely and safe a manner as possible to preserve profitability for our investors. At the same time, we will continue our focus on operating our fertilizer assets profitably, safely and efficiently. We will work to simplify our capital structure and add to our liquidity in the future. Our focus on cost containment is an ongoing process and will continue to evolve, as indeed our company will evolve, over the next year.”

GSO Term Loan

The new lending commitment, in the form of a two-tranche delayed draw term loan, will be available for up to one year. One tranche of the term loan allows Rentech to borrow up to $45 million, of which Rentech has initially borrowed $25 million. The company expects the $45 million tranche to fund construction, working capital and other costs of the Atikokan and Wawa pellet projects until they generate positive cash flow. Rentech may utilize the remaining commitment, of up to $18 million, in the event of certain unplanned downtime at the East Dubuque facility, or unfavorable changes in commodity prices that affect cash distributions from Rentech Nitrogen Partners.

The term loans mature on April 9, 2019. The loans are secured by, among other things, a fixed number of units of Rentech Nitrogen owned by Rentech as well as certain other assets of Rentech and its subsidiaries. The new loan has an interest rate of LIBOR plus 900 basis points per annum, with a LIBOR floor of 1.00%. Rentech also increased the collateral securing its obligations under the preferred stock holders’ existing put option right agreements. Additional details about the terms of the financing will be provided in a Form 8-K that Rentech will file with the Securities and Exchange Commission.

Canadian Wood Pellet Projects Update

Rentech expects that the new term loan, together with its other cash resources, will be sufficient to fund its Atikokan and Wawa pellet projects until they have been commissioned and begin to generate positive cash flow. Rentech currently estimates that the cost to acquire and construct the two plants will be $125 to $130 million, up from $105 million. The majority of the increase is due to delays in construction and higher labor costs for installation of electrical and mechanical components. Rentech expects that working capital and the cost to commission the plants will add approximately $6 to $10 million to the estimated total project cost. Rentech does not expect the plants to generate positive EBITDA or cash flow for the year 2015. Annual stabilized EBITDA projected for both plants remains in line with previous guidance of C$17 to C$20 million.

The Atikokan facility is currently in the commissioning phase and is producing and selling pellets to Ontario Power Generation. Rentech expects the Atikokan facility to be operating at full capacity in six to 12 months.

The Wawa facility is nearing completion of construction. Rentech expects the facility to begin startup and commissioning in the second quarter of 2015 and to operate at full capacity within one year from the start of commissioning.

Expense Reduction Plan

Under the supervision of the Finance Committee, the company engaged an independent consulting firm to assess its cost structure. The company has taken actions to reduce its projected consolidated cash operating costs and expenses in 2015 by approximately $15 million compared to 2014. Cash selling, general and administrative (SG&A) expenses in 2015 for Rentech (excluding Rentech Nitrogen) are expected to be approximately $10 million lower than in 2014, which includes cost savings due to discontinuing energy technologies. Rentech Nitrogen expects 2015 cash operating costs and expenses to be approximately $5 million lower than in 2014, due to, among other things, cost savings from the restructuring of the Pasadena facility. The projection for 2015 reflects $3 million of nonrecurring SG&A expense due to the delayed startup of the Atikokan and Wawa plants. Rentech expects to further discuss its outlook for 2015 on March 17 when it reports results for 2014.

About Rentech, Inc.

Rentech, Inc. (RTK) owns and operates wood fibre processing, wood pellet production and nitrogen fertilizer manufacturing businesses. Rentech offers a full range of integrated wood fibre services for commercial and industrial customers around the world, including wood chipping services, operations, marketing, trading and vessel loading, through its subsidiary, Fulghum Fibres. The Company’s New England Wood Pellet subsidiary is a leading producer of bagged wood pellets for the U.S. heating market. Rentech manufactures and sells nitrogen fertilizer through its publicly-traded subsidiary, Rentech Nitrogen Partners, L.P. (RNF). Please visit www.rentechinc.com and www.rentechnitrogen.com for more information.

Forward Looking Statements

This news release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 about matters such as: the estimated cost of acquiring and constructing the Atikokan and Wawa plants; working capital and startup costs of the two plants; cash flow and EBITDA projections for the plants; timelines associated with various phases of the plants, including operating at full capacity; and anticipated cost savings in 2015. These statements are based on management’s current expectations and actual results may differ materially as a result of various risks and uncertainties. Factors that could cause actual results to differ from those reflected in the forward-looking statements are set forth in Rentech’s press releases and periodic reports filed with the Securities and Exchange Commission, which are available via Rentech’s website at www.rentechinc.com. The forward-looking statements in this news release are made as of the date of this release and Rentech does not undertake to revise or update these forward-looking statements, except to the extent that it is required to do so under applicable law.

ConglomeratesFinanceRentech Contact: Rentech, Inc.

Julie Dawoodjee Cafarella

Vice president of Investor Relations and Communications

310-571-9800

ir@rentk.com […]

Bank's loan sale doesn't end risk

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Posted: Friday, January 2, 2015, 9:58 AM

Despite the retirement of founder Betsy Z. Cohen and a Dec. 31 deal to sell off one-quarter of the Cohen family-controlled loan and cash management company’s $1.1 billion in largely Philadelphia-area business and consumer loans, The Bancorp still has a ways to go before the Wilmington and Philadelphia-based company will have a positive new story for investors, writes analyst Frank Schiraldi in a report to clients at Sandler O’Neill + Partners this morning.

Schiraldi notes the company sold its $268 million “nonperforming/sub-performing” loan book, which had already been marked down by $54 million (plus another $4 milllion during the fourth quarter) to around $210 million, for $194 million in 10-year senior and subordinated notes at around 2.2%, plus $16 million in (probably) cash.

But “unfortunately, the sale does not result in a ‘clean break,'” Schiraldi writes. “We were disappointed” to see that Bancorp is still exposed to losses from the portfolio — because the buyer “is a newly-formed entity, Walnut Street, in which the bank owns a 49% stake.” Plus, most of the proceeds of the sale were paid for in Walnut Street debt, which is backed by those same lower-quality Bancorp loans and collateral (the Philadelphia-area properties whose owners used them to secure their loans from Bancorp).

“We would have thought that minimizing future exposure to this book would have been a priority,” but maybe Bancorp could find no other buyers, Schiraldi adds. Given the small bounce the stock enjoyed on Cohen’s departure announcement (after a sharp decline since last winter), Schiraldi expects shares may now drop again, at least in the short term. The analyst expects the bank will report a fourth-quarter loss, and will keep the stock rated “hold” at least until Bancorp gives investors “greater clarity” on how it will boost profits from its remaining business lines.

[…]

Secret Network Connects Harvard Money To Payday Loans

Alex Slusky was under pressure to put the money in his private-equity fund to work. The San Francisco technology financier had raised $1.2 billion in 2007 to buy and turn around struggling software companies. By 2012, investors including Harvard University were upset that about half the money hadn’t been used, according to three people with direct knowledge of the situation.

Three Americans on the Caribbean island of St. Croix presented a solution. They had built a network of payday-lending websites, using corporations set up in Belize and the Virgin Islands that obscured their involvement and circumvented U.S. usury laws, according to four former employees of their company, Cane Bay Partners VI LLLP. The sites Cane Bay runs make millions of dollars a month in small loans to desperate people, charging more than 600 percent interest a year, said the ex-employees, who asked not to be identified for fear of retaliation.

Read the whole story at Bloomberg News

[…]

SDLP – Seadrill Partners LLC Announces Second Quarter 2014 Results

Highlights

Seadrill Partners reports net income attributable to Seadrill Partners LLC Members for the second quarter 2014 of US$31.2 million and net operating income of US$168.6 million.Generated distributable cash flow of US$51.9 million for the second quarter 2014 representing a coverage ratio of 1.09x.Declared an increased distribution for the second quarter of US$0.5425 per unit, an increase of 7% over the first quarter distribution.Completed US$1.1 billion add-on term loan B. Proceeds of the term loan refinanced existing indebtedness and increased liquidity.Issued a total of 6.1 million common units to the public and 3.2 million common units to Seadrill Limited for general corporate purposesEconomic utilization for the second quarter of 94%

Subsequent Events

Completed the acquisition of an additional 28% interest in Seadrill Operating LP for US$373 million

Financial Results Overview

Seadrill Partners LLC1 reports:

Total contract revenues of US$339.6 million for the second quarter 2014 (the “second quarter”) compared to US$260.6 million in the first quarter of 2014 (the “first quarter”). The increase is primarily driven by a full quarter of operations for the West Auriga and improved uptime on the West Aquarius, West Capricorn, and West Leo.

Operating income for the quarter of US$168.6 million compared to US$123.6 million in the preceding quarter. The increase is largely as a result of the West Auriga and uptime improvements described above.

Net Income for the quarter of US$94.3 million compared to US$43.8 million in the previous quarter. This is after the recognition of the gain/loss on derivative instruments, which reflected a loss of US$27.8 million in the second quarter as compared to a loss of US$49.2 million for the first quarter as a result of a decrease in long term interest rates in the second quarter as well as a higher level of interest rate swaps as at the end of the second quarter. The unrealized non-cash element of these amounts is US$23.5 million loss in the second quarter 2014 and a US$49.8 million loss for the first quarter 2014.

____________________

1) All references to “Seadrill Partners” and “the Company” refer to Seadrill Partners LLC and its subsidiaries, including the operating companies that indirectly own interests in the drilling rigs Seadrill Partners LLC owns: (i) a 30% limited partner interest in Seadrill Operating LP, as well as the non-economic general partner interest in Seadrill Operating LP through its 100% ownership of its general partner, Seadrill Operating GP LLC, (ii) a 51% limited liability company interest in Seadrill Capricorn Holdings LLC and (iii) a 100% limited liability company interest in Seadrill Partners Operating LLC. Seadrill Operating LP owns: (i) a 100% interest in the entities that own the West Aquarius, West Leo and the West Vencedor and (ii) an approximate 56% interest in the entity that owns and operates the West Capella. Seadrill Capricorn Holdings LLC owns 100% of the entities that own and operate the West Capricorn,West Sirius and West Auriga. Seadrill Partners Operating LLC owns 100% of the entities that own and operate the T-15 and T-16 tender barges.

Net income attributable to Seadrill Partners LLC Members was US$31.2 million for the second quarter compared to US$19.8 million for the previous quarter.

Distributable cash flow was US$51.9 million for Seadrill Partners` second quarter as compared to US$30.0 million for the previous quarter2 giving a coverage ratio of 1.09x for the second quarter. The increase is mainly as a result of a full quarter of operations for the West Auriga and improved uptime on the West Aquarius, West Capricorn, and West Leo.

The coverage ratio has been negatively impacted by the increase in units outstanding following the June equity issuance as the second quarter distribution is payable on all outstanding units at the record date. Excluding the distribution in relation to the new units issues in the June equity offering, the coverage ratio would have been 1.22x.

Distribution for the period of US$0.5425 per unit, equivalent to an annual distribution of US$2.17, represents a 40% increase from the Company`s minimum quarterly distribution set at its IPO. Subsequent to the acquisition of an additional 28% ownership interest in Seadrill Operating LP the Company will own a 58% interest in the operating company. The transaction is expected to be cash flow and net asset value accretive and therefore to lead to increased distributions.

__________________

2) Please see Appendix A for a reconciliation of DCF to net income, the most directly comparable GAAP financial measure.

Operations

Seadrill Partners has an interest in nine rigs in operation. The fleet is comprised of four semi-submersible rigs, two drillships and three tender rigs operating in Canada, the US Gulf of Mexico, Ghana, Nigeria, Angola and Thailand respectively.

Overall economic utilization for the fleet was 94% for the second quarter. Following the operational issues related to third party equipment on the West Aquarius, operations have returned to normal as spare parts were located on similar units, demonstrating the synergies of being associated with a strong parent such as Seadrill Limited.

Total operating expenses for the second quarter were US$177.7 million, compared to US$151.7 million in the previous quarter the increase is largely as a result of the West Auriga operating for a full quarter. The Company has good cost controls in place and sees little risk of changes to the operating cost structure.

Acquisitions

On July 21, 2014 Seadrill Partners completed the acquisition of an additional 28% interest in Seadrill Operating LP for a total consideration of US$373 million. Seadrill Operating LP has an ownership interest in three ultra-deepwater drilling rigs, West Aquarius, West Leo and West Cappella, and one semi tender rig, the West Vencedor. The Company now owns a 58% interest in Seadrill Operating LP which in line with the ownership level of the Company`s other ultra-deepwater operating company which is 51% owned. The transaction increases exposure to assets that are well known to the Company and that have stable cash flows. The transaction is expected to be cash flow and net asset value accretive and therefore to lead to increased distributions.

The gross value of the 28% share acquired, after deducting the 44% non-controlling interest in the West Capella, was $804 million. The 28% share of the debt associated with the four rigs owned by Seadrill Operating L.P., net of the West Capella non-controlling interest, was $431 million. The equity portion was therefore $373 million.

The acquisition was funded with a combination of cash and proceeds from the US$300 million equity offering completed on June 19, 2014 and surplus funds from the Company`s recent term loan B financing. The Company sold a total of 6.1 million common units to the public and 3.2 million common units to Seadrill Limited in June 2014.

Financing and Liquidity

As of June 30, 2014, the Company had cash and cash equivalents, on a consolidated basis, of US$523.3 million and two revolving credit facilities totaling US$200 million. One US$100mm facility is provided by Seadrill as the lender and the second US$100mm facility is provided by a syndicate of banks and is secured in connection with the $2.9 billion term loan B. As of June 30, 2014, these facilities were undrawn. Total debt was US$3,248.8 million as of June 30, 2014; US$251 million of this debt was originally incurred by Seadrill, as borrower, in connection with its acquisition of the drilling rigs.

As of June 30, 2014 the Company had two secured credit facilities, in addition to the term loan B. These facilities expire in 2015 and 2017. A refinancing strategy should be expected at maturity debt levels or higher. Additionally the Company has a US$109.5 million vendor loan from Seadrill maturing in 2016 relating to the acquisition of the T-15.

In June 2014, Seadrill Partners executed a US$1.1 billion add-on term loan B. The term loan was upsized from US$1 billion, priced at the existing rate of Libor plus 3%, subsequently swapped to a fixed rate of approximately 5.5% and will be borrowed on substantially the same terms as the Company`s existing US$1.8 billion senior secured term loan B incurred in February 2014. The 1% amortization profile of the new facility further enables the Company to more efficiently manage its replacement capital expenditure reserves by investing in new assets. Following the completion of the add-on term loan the Company`s BB-/Ba3 rating has been reaffirmed by both S&P and Moody`s.

The Board is confident that a similar refinancing can be executed on the remaining back to back loans and related party debt in order to complete the separation of Seadrill Partners` capital structure from Seadrill Limited and further facilitate Seadrill Partners` growth.

As of June 30, 2014, Seadrill Partners had interest rate swaps outstanding on principal debt of US$3,164.2 million. All of the interest rate swap agreements were entered into subsequent to the IPO Closing Date and represent approximately 97% of debt obligations as of June 30, 2014. The average swapped rate, excluding bank margins, is approximately 2.40%. The Company has a policy of hedging the significant majority of its long-term interest rate exposure in order to reduce the risk of a rising interest rate environment.

Market

The oil market fundamentals continue to be strong with high and stable oil prices. Except for very brief periods the oil price has remained above US$100 for the last 3.5 years and the global economy continues along its growth path following the financial crisis. Even with these strong macro fundamentals oil companies seem to be unable to generate free cash flow to grow their businesses and have entered into a period of selectivity on projects as costs escalated across their entire portfolio of projects. The current situation has some similarities to the situation in 2002-2003 when oil companies had limited free cash flow to develop new reserves. This led to an increase in oil price between 2003-2008 when Brent moved from approximately US$40 to US$100 and resulted in increased investment by the oil companies. Today, the the majority of low cost inventory has been produced and oil companies are entering a new phase in which recently discovered oil must be developed in order to grow production. These reserves are in the deep and ultra-deepwater and are far more complex than reserves discovered in prior periods. We can thereby assume that the amount of rig capacity which is needed to produce a barrel of offshore oil in the future will increase.

Over the long term, return on invested capital will be the ultimate driver of capital allocation decisions and the attractive economics of the deep and ultra-deepwater will lead to increased exploration and development spending in these regions. This view is supported by most of the major oil companies.

Ultra-Deepwater Floaters

The near term market for ultra-deepwater drilling units continues to be challenging partly driven by a reduction in exploration drilling which has led to a slower growth rate in overall upstream spending. However, there is evidence of positive developments in the number of tenders that have materialized for 2015 and 2016 projects. In the meantime, independent E&P`s could potentially fill some of the exploration gap that has been created by the cuts in exploration spending from the major oil companies.

The reported overall contracting activity has increased however we see some industry participants, especially those with older units and significant portions of their fleet requiring renewal in the short term, driving prices down. The uncertain cash flow profile of these older units is forcing contractors to make difficult decisions and lock up their best assets in order to gain some clarity on the near term outlook for their business. Older 4th and 5th generations assets are quickly losing pricing power and rates are falling faster than high-specification units. Many of these units are facing high capital expenditure requirements in order to remain part of the active fleet and owners of these assets face decisions to upgrade, swap out with a new unit, or retire the asset. We have seen two examples of this recently in Norway that may prove to be a leading indicator for trends in the global market. Worldwide, out of a total active floater fleet of approximately 300 units there are 128 units more than 25 years old. It is estimated that 70 of these units will be required to have 5 year classing surveys between now and 2017. The total cost for such a classifications can easily be in excess of US$100 million.

Seadrill Partners remains in the best possible competitive position with long term contracts, robust backlog and little exposure to the near term dayrate environment.

The longer term outlook for floaters remains solid. The number of newbuild announcements has rapidly declined and existing newbuild projects are extending delivery dates. Major oil companies continue to focus their activity on 6th generation units with high variable deckload capacity, dual BOP`s, and dual activity capabilities in a bid to advance the safety and efficiency of the rigs they employ. Several oil companies are also now introducing requirements for managed pressure drilling equipment. This is not simply a matter of preference that can dissipate if customer preferences change. This migration to a higher specification fleet is in part dictated by the increasingly challenging project requirements of recent discoveries. Oil companies must now develop the challenging reserves discovered in recent years in order to replace reserves and grow production.

The main driver on the demand side will be the anticipated need to drill development wells to bring ultra-deepwater production from the present level of approximately 1.3 million barrels per day to 5 million barrels per day forecast in 2020. The delivery of 73 ultra-deepwater newbuildings from today until 2018 will increase capacity. However, it can be anticipated that a significant part of the 128 rigs that are more than 25 years old will be retired from service as they come up for classing surveys due to uneconomic classification budgets. At the same time, ordering of new rigs has more or less stopped which sets the framework for a sharp upturn when demand and supply again are balanced.

Activity in Brazil has shown the most notable improvement as Petrobras tendered their first new rig in three years and is progressing through the acceptance process for the 2015 extensions. Following a year when the market saw a number of rigs leaving the country this is certainly a step forward. Although a seemingly bearish sign to see rigs leaving the biggest operator, it was in fact a very natural market development and a perfect example of the bifurcation and fleet renewal that is occurring on a global scale today. In addition to Petrobras` initial tender and expected extension of six rigs that have contracts expiring in 2015, it is expected that an additional three to four assets will be needed in the sort term to meet drilling requirements on the Libra field, with up to ten units expected to be required in total.

The West African market continues to be an active region for tendering activity as oil companies` move into their next budgeting cycle. In particular we see opportunities in Nigeria, Angola, and Ghana as companies work through regulatory approval processes. As demonstrated by Seadrill`s contract announcements for the West Jupiter and West Saturn, tenders will get completed; however patience and working constructively with stakeholders are key for success. Additionally, there is a clear trend that going forward companies will need to develop a strong local presence to be competitive in these markets. Not only is there political pressure to increase local content, but also a clear economic benefit in replacing international workers with local crew.

The US Gulf of Mexico is the primary market that may see a pickup in short term exploration activity given the number of indigenous independent E&P companies in the region. We have already seen opportunistic independent oil and gas companies use the present market weakness to tender for projects where profitability has improved due to lower rig rates. We see some potential to fill in a portion of the exploration spending that has been cut by the major oil companies. Longer term opportunities will materialize, however we expect this to be pushed into 2015 and 2016 similar to other regions.

In Mexico, the energy reform process is progressing at an impressive pace. Following the acceptance of major oil companies into the region and the beginning of formal licensing rounds, demand for floaters should follow. Seadrill continues to be well positioned with PEMEX having operated the West Pegasus for the last 2.5 years with a high degree of success and more recently mobilizing 5 jack-ups to the region. In the intermediate term, prior to the awarding of licenses to major oil companies there may an opportunity for a number of additional floaters based on the current budgeted spending from PEMEX.

Outlook

The second quarter of 2014 was a success for Seadrill Partners having executed an add-on US$1.1 billion term loan B and successful equity offering. Additionally, operations have improved materially since the challenges encountered during first quarter and we have achieved an overall economic uptime of 94%.

Distributions have grown 7% during the second quarter, and 40% since the Company`s IPO in 2012. This growth exceeds the Board`s anticipated annual growth rate of 15% at the time of the Company`s initial public offering in October 2012. Seadrill Partners achieved a coverage ratio of 1.09x during the second quarter even after taking into consideration the increased share count following the equity offering in June. The Company continues to target a coverage ratio of 1.1x after accounting for maintenance and replacement reserves.

This track record demonstrates Seadrill Partners` commitment to growth. The Board and management team remain committed to growing distributions by acquiring operating company units or additional assets. The Board is pleased the Company has managed to diversify its fleet and reached the point where it is prudent to acquire operating company units. By moving swiftly to acquire an additional 5 rigs since IPO Seadrill Partners has opened up a new avenue for distribution growth.

The add-on term loan B completed in June is another important step towards rationalizing Seadrill Parnters` debt structure which makes the Company well positioned for future growth. The transaction, originally marketed as a US$1 billion facility and upsized to US$1.1 billion, is an add-on to the existing US$1.8 billion facility executed in February of this year and priced at the existing loan`s rate of Libor plus 3%. This represents a continuation of the strategy to refinance existing debt of acquired rigs at the partnership level with a more appropriate amortization profile. The addition of another two units to the Borrower Group increases contract duration and further diversifies the cash flows supporting the Company`s credit. By upsizing the loan, the market has acknowledged Seadrill Partners` long term contracted cash flow, visible growth profile and high quality fleet.

During the remainder of the year the Company will continue to explore financing alternatives to refinance the remaining related party debt on the West Vencedor, T-15 and T-16 at the Seadrill Partners level and continue to manage the capital structure to maximize distributable cash flow.

Operationally, the Board and management team are pleased with the improvements shown during the second quarter. The 94% utilization rate reflects the return to normal operations of the West Aquarius and West Capricorn. The ability of an MLP to maintain distributions during periods of operational challenges is linked to fleet size. The West Aquarius would have had a much more pronounced impact had Seadrill Partners owned fewer assets in its portfolio. Seadrill Partner`s ability to quickly grow its fleet has put the Company in the position to manage through periodic downtime while growing distributions. Thus far in the third quarter The West Capricorn has experienced 21 days of downtime due to BOP issues but has now returned to service. Utilization for the rest of the fleet to date in the third quarter is approximately 95% and the Company currently expects to achieve its targeted coverage ratio for the third quarter.

Distributable cash flow for the third quarter of 2014 will be positively impacted by the cash contribution from the additional 28% interest in Seadrill Operating LP. The acquisition increases exposure to assets that are well known to the Company and that have stable cash flows. The transaction is expected to be cash flow and net asset value accretive and therefore to lead to increased distributions.

The Board remains committed to its high growth acquisition strategy in order to strengthen the fleet composition, diversify the customer base, and increase backlog. The Company`s modern best in class fleet and long term contracts protect the Company from the current short-term negative market sentiment. It is a realistic scenario that demand growth for development drilling will have outpaced supply growth when the Company`s existing contracts roll off. Significant old capacity is expected to leave the market, while limited newbuild projects are likely to be initiated. This may put the Company in a strong negotiating position when it comes time to re-contract units. With an orderbacklog of US$5.1 billion, a new fleet and solid prospects for future growth the Board looks optimistically toward the future.

August 27, 2014

The Board of Directors

Seadrill Partners LLC

London, UK.

Questions should be directed to:

Graham Robjohns: Chief Executive Officer

Rune Magnus Lundetrae: Chief Financial Officer

Seadrill Partners Fleet Status
Seadrill Partners 2Q 2014 Results


This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.

The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Seadrill Partners LLC via GlobeNewswire
HUG#1851480

FinanceInvestment & Company InformationSeadrill […]

U.S. Leveraged Loan Volume Slips To $9.2B, Though Market Remains Heated

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U.S. leveraged loan volume totaled $9.2 billion during the week, down from $14-15 billion in each of the previous two weeks, as issuers continue to take advantage of a relatively hot market, though with smaller deals, according to S&P Capital IQ/LCD.

With the recent activity, year-to-date loan volume totals $367 billion, compared to $384 billion at this point last year (of course, there was a record $605 billion in leveraged loan issuance in all of 2013). July is turning out to be a relatively sleepy month volume-wise, with $38 billion in issuance so far, down noticeably from the $64 billion during June.

Despite the dip in issuance, the loan market remains hot, as LCD’s Chris Donnelly explains in his weekly market commentary:

Judging by activity over the past week, recent chatter about an overheated loan market looked to be largely justified. Investor Investor demand was hot and heavy this week, with pricing tightening on no fewer than a dozen transactions alongside other aggressive moves. It was primarily the marginal transactions that saw any degree of difficulty.

Of note this week, Expro Oilfield Services brought to market a $1.52 billion term loan that backed repayment of mezzanine debt. The issuer, which is owned by Goldman Sachs PIA, Arle Capital Partners, Alpinvest Partners and management, has filed for an IPO. The credit is covenant-lite, meaning it has less restrictions on the issuer than does traditional leveraged loans.

Also of note this week, Berkshire Partners launched $415 million in loans to institutional investors, backing the LBO of Portillo Restaurant Group. The credit is covenant-lite as well, and includes a second-lien portion rated CCC by S&P, says LCD’s Kerry Kantin.

Befitting the hot market, leveraged loan yields continue under pressure. The average single-B credit priced over the past 30 days did so to yield 5.10%, down from 5.32% at the end of June, while better-quality (double-B) loans are yielding 4.16%, down a bit from 4.19% at month-end, according to LCD.

This activity comes as investors continue to back away from the leveraged loan asset class. U.S. loan funds this week saw a $413 million cash outflow, the 13th withdrawal in the past 15 weeks, totaling $6.6 billion, according to Lipper. That’s nothing compared to high yield bond investors, however, who are fleeing the market at a pace not seen since Ben Bernanke’s Taper Talk pummeled the market in June 2013.

[…]

With Iconic RadioShack At Crossroads, Leveraged Loan, High Yield Bond Investors Ponder Recoveries

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In what could be the final chapter for an iconic American brand, RadioShack is looking to a futuristic business model that helps launch amateur inventions to store shelves, but it remains to be seen if the company has the financial strength to reinvent itself.

Skeptical investors say the business model for consumer electronics has changed so drastically, it’s time to look at potential recoveries of the company’s debt.

Market action shows the nervousness is mounting. RadioShack’s sole bond issue, 6.75% unsecured notes due 2019, traded at fresh lows of 35.5 on June 23, with the price of the security continuing to lose ground as the company’s cash pile dissipates. For comparison, the bonds touched what were then new lows in March, trading at 55, after the company released poor fourth-quarter results.

In considering potential debt recoveries, there’s also a focus on a credit agreement placed late last year. In December 2013, RadioShack placed a five-year asset-based credit agreement, comprised of a $535 million asset-based revolver and a $50 million asset-based term loan (L+400). GE Capital is administrative agent. CIT and RBS Citizens were also arrangers.

Also in December 2013, the company placed a $250 million second-lien term loan due December 2018. Salus Capital Partners was administrative agent. Salus and two other lenders provided the debt. The interest is paid monthly, never less than 11.5%.

The company is using the new liquidity to help fund a turnaround, layering it in on top of the $325 million issue of 6.75% unsecured notes due 2019, which was sold in April 2011 in a private placement at 99.2 to yield 6.875% (T+381), through Bank of America, Goldman Sachs, J.P. Morgan, and Wells Fargo.

Investors may be skittish about RadioShack’s chance for a successful turnaround, given the notable flameouts in recent years in the consumer electronics retail space.

“When you are consuming as much cash as they are, there could be a restructuring. But if you look at Circuit City or Blockbuster, these stories haven’t tended to be restructurings,” said Noel Hebert, a senior credit analyst at Bloomberg.

“Recovery rates on RadioShack are a little bit harder to figure out. Circuit City went into bankruptcy in November, ahead of the holiday season, with a slightly different product mix, including computers,” he continued.

“RadioShack has handsets, for which decay rates in pricing is high, and they have other products for hobbyists, for which recoveries are a question. Also, when Circuit City filed for bankruptcy in 2008, the competitive aspect from the internet was different. It wasn’t nearly as prolific and Amazon was a fraction of what it is now,” Hebert noted.

Last week, Standard & Poor’s downgraded RadioShack’s corporate rating to CCC from CCC+, and the bonds to CC from CCC-. These ratings indicate a “significant chance” of default within a year, if operating trends don’t change. Moody’s rates the company Caa2 and the bonds Caa3.

“Even if performance trends moderate, we expect the company to be using cash over the near term,” Standard & Poor’s analyst Charles Pinson-Rose said in a June 16 research note.

“We currently expect that the company has liquidity sources to finance the operating losses and working capital needs in the current fiscal year (ending January 2015), but the company would have very small amounts of liquidity early next year, which could lead to a liquidity crisis and default or the company’s decision to seek a financial restructuring.”

If the recovery rating on the bonds is any indication, they still have further to fall.

Standard & Poor’s assigned a 6 recovery rating to the company’s bonds, the lowest possible, signaling an expected recovery of zero to 10%, in a scenario where poor operational trends continue, as a secular change in the industry continues and market share erodes further.

The amount of cash the company uses until then will be key. Recent quarterly results showed the company’s cash declined to $62 million in May, from $180 million in December. Of note, net cash provided by operating activities totaled a negative $104 million in the period ended Feb. 1, 2014, which is a typically cash-generating period since it falls over the holiday season.

Losses from continuing operations widened to $98 million in the fiscal first quarter ended May 3, compared to losses of $28 million in the comparable quarter ended April 30 a year earlier. Sales in the recent quarter dropped to $737 million from $848 million.

Radioshack, since 2011 Bond Issuance

Apr-11 RadioShack issues $325M bonds for general corporate purposes, share repurchase. Notes price at 99.2 to yield 6.875%, with $25M upsizing. Bonds, rated BB/Ba2, gain to 100.5/101 in secondary trade due to demand from high-yield and crossover investors. 11-Nov Standard & Poor’s cuts corporate and bond rating to BB- due to weak financial performance, deteriorating credit metrics Apr-12 Bonds fall two points to 74/76 after Q1 sales, at $1.01B, miss estimates after what management calls “extremely challenging” period Oct-12 Bonds drop 10 points, to 58/59, as shares fall, in wake of news CEO Jim Gooch stepped down. Feb-13 Company appoints Joseph Magnacca, head of marketing and merchandising at Walgreen’s, as CEO Jul-13 RadioShack opens first concept store, in New York City, as part of bid to revitalize U.S. and international retail outlets Aug-13 Bonds gain three points, to 71.5/72.5, after press reports co. is seeking to refinance loans Oct-13 GE Capital, CIT, RBS Citizens, and Salus Capital Partners agree to loan RadioShack a $585M revolver and $250M term loan to refinance debt Feb-14 RadioShack admits in self-effacing ad broadcast during Super Bowl that company is out of touch with the times Mar-14 Company unveils plans to close 1,100 stores of a total of 4,297 and releases 4Q earnings. Bonds touch record low at 55.5/57. May-14 Company reverses plan to close stores, citing lender dispute. Bonds trading at 38.5/40.5. May-14 RadioShack bonds climb 10 points, to trade at 49, amid rumours, including of a deal to eliminate Salus and GE debt Jun-14 RadioShack bonds resume downward trend, decline to 40/41 after Q1 earnings show continued sales decline […]

SDLP – Seadrill Partners LLC – First Quarter 2014 Results

Highlights

Seadrill Partners reports net income attributable to Seadrill Partners LLC Members for the first quarter 2014 of US$19.8 million and net operating income of US$123.6 million.Generated distributable cash flow of US$30.0 million for the first quarter 2014.Declared an increased distribution for the first quarter of US$0.5075 per unit, an increase of 14% over the fourth quarter distribution.Completed US$1.8 billion term loan B and US$100 million revolving facility. Proceeds of the term loan refinanced existing indebtedness and increased liquidity.Issued a total of 11.96 million common units to the public and 1.6 million units to Seadrill to fund the equity portion of the Auriga acquisition.Completed the acquisition of the companies that own and operate the West Auriga for US$1.24 billion on a 100% basis. The acquisition was financed with debt and US$355 million from a common unit offering for the Company`s equity share. Management has recommended a quarterly distribution increase as a result to between US$0.54 and US$0.545.

Financial Results Overview

Seadrill Partners LLC1 reports:

Total contract revenues of US$260.6 million for the first quarter 2014 (the “first quarter”) compared to US$282.1 million in the fourth quarter of 2013 (the “fourth quarter”). The decrease is primarily driven by 60 days of downtime on the West Aquarius and 17 days downtime on the West Capricorn due to equipment failures. This was partly offset by 11 days contribution from the West Auriga.

Net operating income for the quarter of US$123.6 million compared to US$134.4 million in the preceding quarter. The decline is largely as a result of the West Aquarius and West Capricorn downtime noted above.

Net Income for the quarter of US$43.8 million compared to US$113.6 million in the previous quarter. This is after the recognition of the gain/loss on derivative instruments, which reflected a loss of US$(49.2) million in the first quarter as compared to a gain of US$16.1 million for the fourth quarter as a result of a decrease in long term interest rates in the first quarter as well as a higher level of interest rate swaps as at the end of the first quarter. The unrealized non-cash element of these amounts are US$49.9 million loss in the first quarter 2014 and a US$19.1 million gain for the fourth quarter 2013.

____________________

1) All references to “Seadrill Partners” and “the Company” refer to Seadrill Partners LLC and its subsidiaries, including the operating companies that indirectly own interests in the drilling rigs Seadrill Partners LLC owns: (i) a 30% limited partner interest in Seadrill Operating LP, as well as the non-economic general partner interest in Seadrill Operating LP through its 100% ownership of its general partner, Seadrill Operating GP LLC, (ii) a 51% limited liability company interest in Seadrill Capricorn Holdings LLC and (iii) a 100% limited liability company interest in Seadrill Partners Operating LLC. Seadrill Operating LP owns: (i) a 100% interest in the entities that own the West Aquarius, West Leo and the West Vencedor and (ii) an approximate 56% interest in the entity that owns and operates the West Capella. Seadrill Capricorn Holdings LLC owns 100% of the entities that own and operate the West Capricorn,West Sirius and West Auriga. Seadrill Partners Operating LLC owns 100% of the entities that own and operate the T-15 and T-16 tender barges.

Net income attributable to Seadrill Partners LLC Members was US$19.8 million for the first quarter compared to US$42.0 million for the previous quarter.

Distributable cash flow was US$30.0 million for Seadrill Partners` first quarter as compared to US23.2 million for the previous quarter2 giving a coverage ratio of 0.77x for the first quarter. The increase is mainly as a result of the contribution from the T-16, West Leo and West Sirius for the full quarter and from the inclusion of the West Auriga for 11 days in March.

The coverage ratio has been negatively impacted by the increase in units outstanding following the March equity issuance as the first quarter distribution is payable on all outstanding units at the record date. Were the distribution to be paid pro-rata on the new units for the 11 days of March that the Company benefited from the West Auriga cash flow, the coverage ratio would have been 0.92x.

Distribution for the period of US$0.5075 per unit, equivalent to an annual distribution of US$2.03, represents an approximate 31% increase from the Company`s minimum quarterly distribution set at its IPO. Subsequent to the acquisition of the ultra-deepwater drillship the West Auriga in March, Management have recommended to the Board an annualized distribution increase to between $2.16 and $2.18 per unit which would become effective for the distribution with respect to the quarter ending June 30, 2014 and would represent an approximate 40% increase since IPO. Any such increase would be conditional upon, among other things, the approval of such increase by the Board and the absence of any material adverse developments that would make such an increase inadvisable.

____________________

2) Please see Appendix A for a reconciliation of DCF to net income, the most directly comparable GAAP financial measure.

Operations

Seadrill Partners has an interest in nine rigs in operation. The fleet is comprised of four semi-submersible rigs, two drillships and three tender rigs operating in Canada, the US Gulf of Mexico, Ghana, Nigeria, Angola and Thailand respectively.

During the first quarter, Total S.A. exercised their option to convert the contract extension for the West Capella from 5 years to 3 years. The new rate became effective in April 2014. As a result of this change in contract terms the dayrate has increased from US$580,000 per day to US$627,500 per day. The use of the option to convert to a shorter contract with a higher dayrate reflects a transfer of operatorship for the license and the wish for the new operator to retain flexibility. The Company is confident however that there will be additional requirements for the rig in Nigeria post 2017.

Overall economic utilization for the fleet was 82% for the first quarter. With the exception of 77 days downtime linked to the West Aquarius and West Capricorn equipment failures, the Company`s remaining fleet performed well achieving an economic utilization rate of 98%.

Total operating expenses for the first quarter were US$151.7 million, compared to US$148.0 million in the fourth quarter. The Company has good cost controls in place and sees little risk of changes to the operating cost structure.

Acquisitions

On March 21, 2014 Seadrill Partners completed the acquisition of the companies that own and operate the ultra-deepwater drillship the West Auriga for a total consideration of US$1.24 billion on a 100% basis. The West Auriga was acquired by Seadrill Capricorn Holdings LLC (51% owned by SDLP). Debt funding for the acquisition was US$543 million comprised of a secured debt facility and a US$100 million discount note from Seadrill. The Company`s equity portion, for its share of the rig acquisitions, of US$355 million was funded with proceeds from Seadrill Partner`s second public follow on equity offering.

The West Auriga is contracted with BP in the US Gulf of Mexico at a dayrate of US$565,000 (excluding approximately $37,500 per day payable by the customer over the term of the contract relating to mobilization, variation orders and other special and standby rates) until the third quarter of 2020. The long term contracted cash flows of this acquisition further enhances Seadrill Partners` cash flow profile and visibility in distributable cash flows, as well as further diversifies Seadrill Partners fleet and reduces volatility in operating results.

As noted above the Company completed a public offering (the “Offering”) of 10,400,000 common units at a price of $30.60 per common unit on March 17, 2014. In addition, the underwriters exercised in full their option to purchase an additional 1,560,000 common units. The total number of common units sold in the Offering was therefore 11,960,000. Concurrently with the closing of the Offering, Seadrill Limited (“Seadrill”) purchased directly from the Company 1,633,987 common units at a price of $30.60 per unit.

Financing and Liquidity

As of March 31, 2014, the Company had cash and cash equivalents, on a consolidated basis, of US$130.1 million and two revolving credit facilities totaling US$200 million. One US$100mm facility is provided by Seadrill as the lender and the second US$100mm facility is provided by a syndicate of banks and is secured in connection with the $1.8 billion term loan B. As of March 31, 2014, US$0.0 million was drawn on these facilities. Total debt was US$3,139.9 million as of March 31, 2014; US$1,134.6 million of this debt was originally incurred by Seadrill, as borrower, in connection with its acquisition of the drilling rigs.

As of March 31, 2014 the Company had four secured credit facilities, in addition to the term loan B. These facilities expire in 2015, 2016, 2017, and 2025. A refinancing strategy similar to the term loan B executed in February should be expected at maturity debt levels or higher. Additionally the Company has a US$109.5 million vendor loan from Seadrill maturing in 2016 relating to the acquisition of the T-15 and a US$100.0 million discount note maturing in 2015 relating to the acquisition of the West Auriga.

In February 2014, Seadrill Partners executed a US$1.8 billion term loan B and US$100.0 million revolving credit facility. The term loan was upsized from US$1.7 billion and priced at Libor plus 3%, the low end of the price range, and subsequently swapped to a fixed rate of approximately 5.5%. The 1% amortization profile of the new facility will enable the Company to more efficiently manage its replacement capital expenditure reserves by investing in new assets. In conjunction with the term loan B and revolver Seadrill Partners obtained a credit rating of BB- / Ba3. As a rated entity Seadrill Partners` access to and cost of funding should be improved, thus increasing financial flexibility.

The Board is confident that a similar refinancing can be executed on the remaining back to back loans and related party debt in order to achieve a capital structure that is independent from Seadrill Limited and further facilitate Seadrill Partners` growth.

As of March 31, 2014, Seadrill Partners had interest rate swaps outstanding on principal debt of US$2,948.0 million. All of the interest rate swap agreements were entered into subsequent to the IPO Closing Date and represent approximately 97% of debt obligations as of March 31, 2014. The average swapped rate, excluding bank margins, is approximately 2.02%. The Company has a policy of hedging the significant majority of its long-term interest rate exposure in order to reduce the risk of a rising interest rate environment.

Market

Several new deepwater contracts have been announced recently indicating a dayrate level between 500 and 550k. There are reasons however to believe that some of our major competitors will accept rates levels for a sixth generation vessels in the 425 – 475k level. Currently, the market suffers from limited exploration drilling and delays in field developments from the major oil companies. The root cause of the muted activity level is the fact that many major oil companies are working to improve their cash generation. The outlook is further affected by sublets and by lower specification rigs trying to price themselves into a higher end market. The key question is when oil majors will resume tendering activity. To some degree, the decreased level of activity leads to further delays. Oil companies are trying to determine when dayrates will trough, thus are not compelled to sign contracts if they feel dayrates are still declining. Once a leading edge is defined others tend to be compelled to award contracts. To this point, in the recent weeks we have seen increased inquiries by both majors and independent operators following the establishment of a leading edge dayrate.

In the medium term, once oil majors begin contracting activity again, rates will be lower than the high rates experienced in 2013. Most of our major competitors are facing tough investment decisions due to the fact that a large percentage of their assets are in excess of 20 years old and will need significant upgrade investment to keep them running. Seadrill Partners is in the beneficial position of not being forced to take many of these types of decisions. Seadrill Partners` cash flow profile is strong due to a large contracted backlog with limited exposure to the current dayrate weakness.

The current uncertainty in the market has reduced newbuilding activities and only 7 rigs have now been ordered for 2016 delivery and 5 for 2017. These numbers exclude the Brazilian built rigs where a large degree of uncertainty remains as to actual delivery dates. These numbers are significantly lower than the 30 and 19 deliveries in 2014 and 2015 respectively.

Looking at the market as a whole, the acute challenges lie with fourth and fifth generation assets. The oil companies` new requirements after Macondo and the focus on increased water depth areas have significantly limited the contractibility of older equipment. The owners will face the choice of investing significant amounts into twenty or thirty year old assets in order to try to meet the new demands or simply just lay up the unit. Some contractors may also attempt asset swaps with new builds without a contract for older assets on long-term commitments, in an attempt to secure work for their premium units while saving cost on large capex upgrades. This results in the near term potential for more stacking of older units. According to Fearnley`s a total of 51 units older than 25 years are required to undergo their special survey in the next 24 months. It has been shown from the prior cycles that such upgrades carried out by several of our competitors has had a materially lower return than Seadrill`s focus on building a modern high specification fleet.

Ultra-deepwater floaters (>7,500 ft water depth)

Ultra-deepwater activity continues to be driven by the “Golden Triangle” of the US Gulf of Mexico, Brazil and West Africa. Since the year 2000 approximately 8 billion boe have been discovered in the ultra-deepwater, the majority of which have been in the golden triangle. Over the same time period only 500 million boe have been produced from ultra-deepwater regions. This represents a reserve to production ratio of approximately 16 for ultra-deepwater projects. This bodes quite well for expected future activity as the addition of reserves is a key strategic objective for major oil companies. The proving of reserves in these areas will mitigate declines in the R/P ratio following this period of inactivity. From an economic standpoint, the average cost of supply in ultra-deepwater regions is approximately $56 per barrel. This is very attractive compared to the marginal cost of supply onshore North America of approximately $65 per barrel. Over the long term, capital will be focused on more profitable projects, which are found in the ultra-deepwater.

In addition to the traditional ultra-deepwater regions, Mexico presents a particularly interesting opportunity for future work. Legislation is moving forward at an impressive pace and we expect the opening up of projects to potentially impact 2015 demand. Seadrill has operated the West Pegasus in Mexico for the last 2.5 years and has developed a solid operational track record and good working relationship with Pemex. The results from the exploration drilling campaign have been very encouraging. It is expected that the first Mexican deal with an international oil major will be concluded in the second half of 2014. As capital from major oil companies enters the country, demand for rigs is likely to follow.

Customers continue to focus their bidding activity on units that can provide dual BOP`s, increased deck space and high variable deck load capacity.

Outlook

The first quarter of 2014 has been an active one for the Company, executing its second follow on equity offering to finance the acquisition of the West Auriga and successfully completing its term loan B refinancing. Distributions have grown 14% during the first quarter, and taking into account the distribution increase recommended by management in connection with the most recent acquisition, distributions will have grown approximately 40% since IPO in October 2012. This growth exceeds the Board`s anticipated annual growth rate of 15% at the time of the Company`s initial public offering in October 2012.

The Board believes this demonstrates the Company`s commitment to growth and is fully focused on continuing this aggressive growth strategy. This growth will be driven primarily by acquisitions from Seadrill`s long term contracted premium ultra-deepwater rig fleet as well as the acquisition of additional units in Seadrill Partners` operating companies.

The term loan B refinancing completed in February is an important step towards rationalizing Seadrill Partners` debt structure, in particular to lower debt amortization so it can use replacement capital expenditure cash reserves more efficiently and to create a capital structure independent of Seadrill. As noted above the transaction has been successful and the Company anticipates using this market again in the future to refinance debt on existing units and future acquisitions.

The term loan B facility, compared to traditional rig financing, will result in higher interest cost of approximately US$22 million per annum and at the same time reduce installments by approximately US$162 million per annum. The net effect will be an increase in free cash generation after finance of approximately US$140 million annually for the four rigs supported by this facility.

The Company now has access to debt capital markets and strong financial position with a relatively low net debt to EBITDA ratio. The Board therefore believes the Company has the flexibility to acquire additional accretive assets even without using the equity market

Operationally, the Board and management team are not satisfied with the performance year to date. The utilization rate of 82% is below the standards set for the Company. The West Aquarius and West Capricorn have experienced a collective 77 days of downtime. Although equipment failures are partly to blame, uptime needs to be improved. Developments thus far during the second quarter confirms the Company has returned to solid operational performance with overall economic utilization rate averaging around 97% to date. With continued good performance the Company`s coverage ratio should be back up to target levels of 1.1 in the second quarter.

Distributable cash flow for the second quarter of 2014 will be positively impacted by the cash contribution for the full quarter from the West Auriga and the return to normal operations on the West Aquarius and West Capricorn.

The acquisition of the West Auriga has increased revenue backlog to approximately $5.5 billion and average contract term to 3.74 years. This puts the Company in a strong position with regards to short-term negative market developments.

The Board remains committed to its high growth acquisition strategy in order to strengthen the fleet composition, diversify the customer base, and increase backlog. The Company`s modern best in class fleet and long term contracts protect the Company from short-term negative market sentiment and position it to potentially be re-contracting rigs into a rising dayrate environment in the future.

May 28, 2014
The Board of Directors
Seadrill Partners LLC
London, UK.

Questions should be directed to:
Graham Robjohns: Chief Executive Officer
Rune Magnus Lundetrae: Chief Financial Officer

Seadrill Partners 1Q 2014
Seadrill Partners 1Q 2014 Fleet Status


This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.

The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Seadrill Partners LLC via GlobeNewswire
HUG#1789215

Oil, Gas, & Consumable FuelsFinanceSeadrill […]

Merchant Cash and Capital Receives $75 Million Term Loan from Investment Consortium led by Comvest Partners

NEW YORK–(BUSINESS WIRE)–

Merchant Cash and Capital (“MCC”), a pioneer and leader in the small business financing industry, today announced that it has expanded its secured term loan to $75 million through a consortium led by Comvest Partners’ Comvest Capital II debt fund (“Comvest”). Coupled with other debt facilities currently in place, this new commitment increases MCC’s total debt facilities to approximately $100 million.

“Like the businesses we finance, we need resources to develop more programs and services for our customers, and that is exactly what this new financing will allow us to do,” said MCC Chief Executive Officer Stephen Sheinbaum. “Our new term loan gives us the capital needed to invest in technology and product development, and catapult the growth of MCC from the current levels of funding $20 million per month to more than double that over the course of the next year.”

“We have enjoyed watching the product growth and continuous improvement of MCC over the last several years,” said Greg Reynolds, Managing Director at Comvest. “We are confident that MCC is well-positioned for the future and are delighted to increase our capital commitment and bring Crystal Financial and Medley Capital into the new term loan.”

2013 was a watershed year for MCC, as it successfully launched its ASAP technology which streamlines and automates the approval-to-funding process for merchants and partners alike. In addition to technology innovations and product expansion, MCC has also added to the depth of its senior management team with the addition of Jeffrey Beckwith, Chief Financial Officer.

“Since 2006, MCC has not had a need to raise additional equity,” said Beckwith. “However, with the closing of this new facility, we now feel well positioned to pursue and consider strategic debt and equity capital raise opportunities.”

About Merchant Cash and Capital

Merchant Cash and Capital, LLC combines advanced technology and unmatched customer service to provide financing for business owners around the country. With its ASAP (Automated Submission and Pre-Approval System) technology, MCC enables business owners to instantly secure funding approvals – a process that took 24 hours, now takes 24 seconds. MCC has funded more than $650 million to over 13,000 unique business owners and a total of 29,000 advances. For more information, visit www.merchantcashandcapital.com or call 1-877-208-7758.

About Comvest Partners

Comvest Partners, with $1.2 billion of assets under management, provides flexible financing solutions to lower middle-market companies through its equity and debt funds, often meeting time-critical and complex funding requirements. Our firm includes seasoned, senior level operating executives who partner with managers and owners of companies to operationally improve businesses and create long-term value. Since 2000, Comvest has invested more than $1.9 billion of capital in over 130 public and private companies. Please visit www.comvest.com.

Venture CapitalFinance Contact:

Peppercomm

Lauren Parker, 212-931-6143

lparker@peppercomm.com […]

Bank Watch: Wells, BofA are tops in financing payday lending

As regulators in states across the country increasingly crack down on payday loans, the big banks that finance those businesses have come under scrutiny. A report to be released today by Durham-based Reinvestment Partners finds that Wells Fargo and Bank of America are the two biggest players funding payday lenders.

Wells Fargo has provided $1.2 billion in lines of credit and other loans to companies that make payday loans, the report states — more than any other bank. Bank of America was No. 2 with about $664 million.

Payday loans generally refer to short-term loans that carry high interest rates and fees. Companies in Reinvestment Partners study also include refund anticipation lenders, pawn shops, and rent-to-own companies.

Wells Fargo has lent money to 13 payday loan companies, including Cash America and First Cash Financial, the report says, based on securities filings made by the companies. Bank of America was connected to 11 such companies, including Advance America. Some of the companies on the lists include firms like Jackson Hewitt, which deal primarily in tax and other services but occasionally offer payday-loan-type products.

Activists have regularly criticized both banks for their financing arrangements with the payday loan companies. Several times at recent annual shareholder meetings in Charlotte, Bank of America CEO Brian Moynihan has been asked about his bank’s funding of pay day loan companies. He’s responded by saying the Charlotte bank does not make payday loans.

***Sign up for our morning email newsletter — the Bank Watch Morning Report. Find out more here.***

[…]

TEXT-S&P raises ratings in CLO deal CELF Loan Partners V

Nov 30 –

OVERVIEW

— We have reviewed the performance of CELF Loan Partners V by applying our relevant criteria and conducting our credit and cash flow analysis.

— Following our review, we have raised our ratings on the class A, C, and D notes and affirmed our rating on the class B notes.

— CELF Loan Partners V is a cash flow CLO transaction that securitizes loans to primarily speculative-grade corporate firms.

Standard & Poor’s Ratings Services today raised its credit ratings on CELF Loan Partners V Ltd.’s class A, C, and D notes. At the same time, we have affirmed our rating on the class B notes (see list below).

Today’s rating actions follow our assessment of the transaction’s performance using data from the latest available trustee report in addition to our credit and cash flow analysis. We have taken into account recent developments in the transaction and reviewed it under our relevant criteria for structures of this type.

We have noted the partial redemption of the class A notes in 2012. The credit enhancement has increased across all rated classes of notes, compared with our last analysis (see “Ratings Raised On All Classes Of Notes In CELF Loan Partners V Due To Improved Performance,” published Oct (KOSDAQ: 039200.KQnews) . 11, 2011).

Following our analysis, we have observed that the proportion of assets that we rate in the ‘CCC’ category (i.e., rated ‘CCC+’, ‘CCC’, or ‘CCC-‘) has increased to 12.71% of the remaining pool, from 8.34% as of our last review. Over the same period, the percentage of defaulted assets has decreased to 2.20% of the remaining pool from 6.23%. The transaction now has a shorter weighted-average life and higher weighted-average spread.

We subjected the transaction’s capital structure to a cash flow analysis to determine the break-even default rate for each rated class at each rating level. We incorporated a number of cash flow stress scenarios, using various default patterns, in conjunction with different interest-rate and foreign-exchange stress scenarios. As a result of our analysis, we have raised our ratings on the class A notes to ‘AA+ (sf)’, on the class C notes to ‘A- (sf)’, and on the class D notes to ‘BBB+ (sf)’. We have affirmed our ‘A+ (sf)’ rating on the class B notes as the credit enhancement is still commensurate with the current rating.

Deutsche Bank AG (Xetra: 514000news) (A+/Negative/A-1) acts as an account bank and custodian in the transaction. In our view, the counterparty is appropriately rated to support the ratings on these notes (see “Counterparty Risk Framework Methodology And Assumptions,” published on May 31, 2012).

CELF Loan Partners V entered into a number of derivatives agreements to mitigate currency risks in the transaction. We consider that the documentation for these derivatives does not fully comply with our 2012 criteria. Therefore, in our cash flow analysis for scenarios above ‘A+’, we assumed no benefit from the currency options.

CELF Loan Partners V is a cash flow collateralized loan obligation (CLO) transaction that securitizes loans to primarily speculative-grade corporate firms. The transaction closed in June 2008 and is managed by CELF Advisors LLP.

RELATED CRITERIA AND RESEARCH

— Counterparty Risk Framework Methodology And Assumptions, May 31, 2012

— Credit Rating Model: CDO Evaluator 6.0, March 19, 2012

— European Structured Finance Scenario And Sensitivity Analysis: The Effects Of The Top Five Macroeconomic Factors, March 14, 2012

— European Structured Finance Scenario And Sensitivity Analysis: The Effects Of The Top Five Macroeconomic Factors, March 14, 2012

— Global Structured Finance Scenario And Sensitivity Analysis: The Effects Of The Top Five Macroeconomic Factors, Nov. 4, 2011

— Ratings Raised On All Classes Of Notes In CELF Loan Partners V Due To Improved Performance, Oct. 11, 2011

— Nonsovereign Ratings That Exceed EMU Sovereign Ratings: Methodology And Assumptions, June 14, 2011

— Credit Rating Model: S&P Cash Flow Evaluator, Aug. 17, 2010

— Update To Global Methodologies And Assumptions For Corporate Cash Flow And Synthetic CDOs, Sept. 17, 2009

— Understanding Standard & Poor’s Rating Definitions, June 3, 2009

— CDO Spotlight: General Cash Flow Analytics for CDO Securitizations, Aug. 25, 2004

RATINGS LIST

Class Rating

To From

CELF Loan Partners V Ltd.

EUR243.154 Million, GBP70.465 Million, $108.470 Million Floating-Rate Notes

Ratings Raised

A-1 AA+ (sf) AA- (sf)

A-2 AA+ (sf) AA- (sf)

A-3 AA+ (sf) AA- (sf)

C A- (sf) BBB+ (sf)

D-1 BBB+ (sf) BBB- (sf)

D-2 BBB+ (sf) BBB- (sf)

Rating Affirmed

B-1 A+ (sf)

B-2 A+ (sf)

[…]