CQS Rig Finance Fund Limited
Shareholder Monthly Fact Sheet - July 2010
Following the significant sell off in the previous two months, equity and credit
markets rallied sharply in July. Clarity provided by the release of the European
bank stress test data, coupled with solid retail sales data and earnings
optimism, pushed the S&P 500 Index up 7% to close the month above the 1100 mark.
The oil price followed the trend and finished up around 4% on the month at
approximately USD 79 per barrel.
During July there were positive developments at the Macondo field in the Gulf of
Mexico. The successful fixing of a new capping stack allowed extensive well
integrity testing to take place and the pressure inside the well to be
accurately measured. Shortly thereafter, BP completed the cement plug sealing
off the top part of the well. The next step is completing the relief well and
setting a plug low in the well to ensure there are no leaks from potential
ruptures deeper in the well bore. This should see the well permanently sealed.
As at the close of business on 30 July 2010, the estimated NAV per share was
25.03 pence against 19.70 pence at the end of June. The large gains were
attributable to the significant increase in the value of the bonds issued by
Skeie Drilling & Production ASA (SKDP) following the news of a takeover bid by
Rowan Companies Inc. The Company owns all four SKDP bonds in issue. On the 20th
July, it was announced that the Board of Directors of Rowan had approved the
purchase of all of the ordinary shares in SKDP. Rowan will launch a tender offer
for the remaining 49.7% of SKDP's outstanding ordinary shares, and expects to
complete the offer in September 2010, following the prospectus review by the
Norwegian Financial Supervisory Authority. The company has stated that it is
looking at options regarding the refinancing of the bonds but no clarity has
been provided as to its intentions at this point.
There were two pieces of news on the Sevan group of companies during the month.
Sevan Drilling AS, a wholly owned subsidiary of Sevan Marine ASA, announced that
it has signed a mandate letter and term sheet with DVB Group Merchant Bank
(Asia) Pte Ltd and NIBC Bank N.V. for the arrangement of a USD 530 million
limited recourse secured term loan facility. The facility will replace the
existing debt of the Sevan Driller rig which includes a 1st lien bank facility
of USD 250 million and a 2nd lien bond facility of NOK 1 billion and is subject
to syndication and documentation. The Company owns the existing Sevan Drilling
bond and we believe the above news adds to the likelihood that these bonds will
be called prior to maturity.
Sevan Marine ASA also issued a new USD 200 million bond, the proceeds of which
were used to refinance the existing 9.25% 2011 bond. The Company had a holding
in this bond which was redeemed at a price of 102.5 and subscribed for, and was
allocated, an amount of the new issue.
All market data sourced from Bloomberg.
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
All reproduction for further distribution is prohibited.
Source: CQS Rig Finance Fund Ltd via Thomson Reuters ONE