March 22, 2018 / 8:18 PM / 2 years ago

Borr Drilling, citing Paragon Offshore purchase, says CEO leaves

OSLO (Reuters) - Offshore rig firm Borr Drilling (BDRILL.OL) said on Thursday its chief executive Simon Johnson was leaving the company in light of its acquisition of rival Paragon Offshore.

Borr Drilling offered to buy Paragon Offshore for $232.5 million in February.

The company said Johnson had agreed to terminate his contract in view of the Paragon transaction. He had previously worked at Noble Corp (NE.N), which spun its older assets into Paragon Offshore in 2014, just before an oil market downturn started.

Paragon emerged from Chapter 11 bankruptcy in the United States last July, eliminating about $2.3 billion of debt‍.

Borr Drilling, founded in 2016 by chairman Tor Olav Troeim, also said on Thursday it was no longer looking to expand its fleet significantly.

It will seek to raise $250 million in issuing up to 54.3 million new shares at a price of $4.6 per share to finance the Paragon acquisition, it said. The issue is equivalent to 11.4 percent of outstanding shares.

Schlumberger (SLB.N), the world’s largest oil service firm, is Borr Drilling’s biggest shareholder with 15.8 percent.

The Oslo-listed company grew rapidly by buying jack-up rigs from Hercules, Transocean, and PPL.

It said it was likely to scrap 21 older jack-up rigs out of Paragon’s total fleet of 32 rigs.

“We... see today few additional assets to be acquired. Borr is now close to the finish line building the leading jack-up drilling company both in terms of operations and assets,” Troeim said.

Borr Drilling said it will own 24 rigs after the transaction, including rigs under construction, and expected rig dayrates to start rising into 2019 as oil firms increase capital spending on exploration after years of cuts.

The Paragon offer expires on Saturday and is expected to close by around Tuesday, Borr Drilling said.

Chief Operating Officer Svend Anton Maier will replace Johnson, who had been with the firm since last August, as interim chief executive with immediate effect, it said.

Reporting by Nerijus Adomaitis; editing by John Stonestreet

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