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Debt | 9 Months Ended
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Sep. 30, 2018
Debt |
Debt | Note 8—Debt Overview Outstanding debt—The aggregate principal amounts and aggregate carrying amounts, net of debt‑related balances, including unamortized discounts, premiums, issue costs and fair value adjustments of our debt, were as follows (in millions):
|  | Principal amount |  |  | Carrying amount |
|  | September 30, |  | December 31, |  |  | September 30, |  | December 31, |
|  | 2018 |  | 2017 |  |  | 2018 |  | 2017 |
Eksportfinans Loan due January 2018 |  | $ | — |  | $ | 26 |  |  | $ | — |  | $ | 26 |
6.50% Senior Notes due November 2020 |  |  | 286 |  |  | 286 |  |  |  | 288 |  |  | 288 |
6.375% Senior Notes due December 2021 |  |  | 328 |  |  | 328 |  |  |  | 327 |  |  | 327 |
5.52% Senior Secured Notes due May 2022 |  |  | 303 |  |  | 362 |  |  |  | 299 |  |  | 356 |
3.80% Senior Notes due October 2022 |  |  | 411 |  |  | 506 |  |  |  | 408 |  |  | 502 |
0.50% Exchangeable Bonds due January 2023 |  |  | 863 |  |  | — |  |  |  | 862 |  |  | — |
9.00% Senior Notes due July 2023 |  |  | 1,250 |  |  | 1,250 |  |  |  | 1,220 |  |  | 1,216 |
5.875% Senior Secured Notes due January 2024 |  |  | 750 |  |  | — |  |  |  | 734 |  |  | — |
7.75% Senior Secured Notes due October 2024 |  |  | 510 |  |  | 540 |  |  |  | 498 |  |  | 526 |
6.25% Senior Secured Notes due December 2024 |  |  | 531 |  |  | 562 |  |  |  | 520 |  |  | 549 |
6.125% Senior Secured Notes due August 2025 |  |  | 600 |  |  | — |  |  |  | 587 |  |  | — |
7.50% Senior Notes due January 2026 |  |  | 750 |  |  | 750 |  |  |  | 742 |  |  | 742 |
7.45% Notes due April 2027 |  |  | 88 |  |  | 88 |  |  |  | 86 |  |  | 86 |
8.00% Debentures due April 2027 |  |  | 57 |  |  | 57 |  |  |  | 57 |  |  | 57 |
7.00% Notes due June 2028 |  |  | 300 |  |  | 300 |  |  |  | 307 |  |  | 307 |
Capital lease contract due August 2029 |  |  | 519 |  |  | 541 |  |  |  | 519 |  |  | 541 |
7.50% Notes due April 2031 |  |  | 588 |  |  | 588 |  |  |  | 585 |  |  | 585 |
6.80% Senior Notes due March 2038 |  |  | 1,000 |  |  | 1,000 |  |  |  | 991 |  |  | 991 |
7.35% Senior Notes due December 2041 |  |  | 300 |  |  | 300 |  |  |  | 297 |  |  | 297 |
Total debt |  |  | 9,434 |  |  | 7,484 |  |  |  | 9,327 |  |  | 7,396 |
Less debt due within one year |  |  |  |  |  |  |  |  |  |  |  |  |  |
Eksportfinans Loan due January 2018 |  |  | — |  |  | 26 |  |  |  | — |  |  | 26 |
5.52% Senior Secured Notes due May 2022 |  |  | 83 |  |  | 79 |  |  |  | 81 |  |  | 77 |
5.875% Senior Secured Notes due January 2024 |  |  | 83 |  |  | — |  |  |  | 79 |  |  | — |
7.75% Senior Secured Notes due October 2024 |  |  | 60 |  |  | 60 |  |  |  | 58 |  |  | 57 |
6.25% Senior Secured Notes due December 2024 |  |  | 62 |  |  | 62 |  |  |  | 60 |  |  | 60 |
6.125% Senior Secured Notes due August 2025 |  |  | 66 |  |  | — |  |  |  | 63 |  |  | — |
Capital lease contract due August 2029 |  |  | 31 |  |  | 30 |  |  |  | 31 |  |  | 30 |
Total debt due within one year |  |  | 385 |  |  | 257 |  |  |  | 372 |  |  | 250 |
Total long-term debt |  | $ | 9,049 |  | $ | 7,227 |  |  | $ | 8,955 |  | $ | 7,146 |
Scheduled maturities—At September 30, 2018, the scheduled maturities of our debt were as follows (in millions):
|  | Total |
Twelve months ending September 30, |  |  |  |
2019 |  | $ | 385 |
2020 |  |  | 392 |
2021 |  |  | 685 |
2022 |  |  | 681 |
2023 |  |  | 2,838 |
Thereafter |  |  | 4,453 |
Total principal amount of debt |  |  | 9,434 |
Total debt-related balances, net |  |  | (107) |
Total carrying amount of debt |  | $ | 9,327 |
Interest rate adjustments—The interest rates for certain of our notes are subject to adjustment from time to time upon a change to the credit rating of our non‑credit enhanced senior unsecured long‑term debt. As of September 30, 2018, the interest rate in effect for the 6.375% senior notes due December 2021, 3.80% senior notes due October 2022 and the 7.35% senior notes due December 2041 was 8.375 percent, 5.80 percent and 9.35 percent, respectively. Secured Credit Facility—In June 2018, we entered into a bank credit agreement, which established a $1.0 billion secured revolving credit facility (the “Secured Credit Facility”), which is scheduled to expire on the earlier of (i) June 22, 2023 and (ii) if greater than $300 million aggregate principal amount of our 9.00% Senior Notes due July 2023 remain outstanding in April 2023, such date. The Secured Credit Facility is guaranteed by Transocean Ltd. and certain subsidiaries. The Secured Credit Facility is initially secured by, among other things, a lien on the ultra‑deepwater floaters Deepwater Asgard, Deepwater Invictus and Discoverer Inspiration and the harsh environment floaters Transocean Barents and Transocean Spitsbergen. The Secured Credit Facility contains covenants that, among other things, include maintenance of certain guarantee and collateral coverage ratios, a maximum debt to capitalization ratio of 0.60 to 1.00 and minimum liquidity of $500 million. The Secured Credit Facility also restricts the ability of Transocean Ltd. and certain of our subsidiaries to, among other things, merge, consolidate or otherwise make changes to the corporate structure, incur liens, incur additional indebtedness, enter into transactions with affiliates and pay dividends and other distributions. We may borrow under the Secured Credit Facility at either (1) the reserve adjusted London interbank offered rate plus a margin (the “Secured Credit Facility Margin”), which ranges from 2.625 percent to 3.25 percent based on the credit rating of the Secured Credit Facility, or (2) the base rate specified in the credit agreement plus the Secured Credit Facility Margin, minus one percent per annum. Throughout the term of the Secured Credit Facility, we pay a facility fee on the amount of the underlying commitment which ranges from 0.375 percent to 1.00 percent based on the credit rating of the Secured Credit Facility. At September 30, 2018, based on the credit rating of the Secured Credit Facility on that date, the Secured Credit Facility Margin was 2.75 percent and the facility fee was 0.50 percent. At September 30, 2018, we had no borrowings outstanding, $24 million of letters of credit issued, and we had $1.0 billion of available borrowing capacity under the Secured Credit Facility. See Note 12—Commitments and Contingencies—Global Marine litigation. Former Credit Facility—In June 2014, we entered into an amended and restated bank credit agreement, which established a $3.0 billion unsecured five‑year revolving credit facility, which was scheduled to expire on June 28, 2019 (the “Former Credit Facility”). In June 2018, we terminated the Former Credit Facility and recognized a loss of $1 million associated with the termination. Debt issuances Senior secured notes—On July 13, 2018, we issued $750 million aggregate principal amount of 5.875% senior secured notes due January 2024 (the “5.875% Senior Secured Notes”) and received aggregate cash proceeds of $733 million, net of discount and issue costs. In connection with the issuance of such notes, we were required to deposit $63 million in restricted cash accounts to satisfy debt service and reserve requirements. We are required to pay semiannual installments of principal and interest on the 5.875% Senior Secured Notes, beginning January 15, 2019. The 5.875% Senior Secured Notes are secured by the assets and earnings associated with the harsh environment floaters Transocean Enabler and Transocean Encourage and the equity of the wholly owned subsidiaries that own or operate the collateral rigs. On July 20, 2018, we issued $600 million aggregate principal amount of 6.125% senior secured notes due August 2025 (the “6.125% Senior Secured Notes” and, together with the 5.875% Senior Secured Notes, the “2018 Senior Secured Notes”), and we received aggregate cash proceeds of $586 million, net of discount and issue costs. In connection with the issuance of such notes, we were required to deposit $51 million in restricted cash accounts to satisfy debt service and reserve requirements. We are required to pay semiannual installments of principal and interest on the 6.125% Senior Secured Notes, beginning February 1, 2019. The 6.125% Senior Secured Notes are secured by the assets and earnings associated with the ultra‑deepwater floater Deepwater Pontus and the equity of the wholly owned subsidiaries that own or operate the collateral rig. We may redeem all or a portion of the 2018 Senior Secured Notes at a price equal to 100 percent of the aggregate principal amount plus a make‑whole provision. We will be required to redeem the notes at a price equal to 100 percent of the aggregate principal amount without a make‑whole provision, upon the occurrence of certain events related to the collateral rigs and the related drilling contracts. The indentures that govern the 2018 Senior Secured Notes each contain covenants that, among other things, limit the ability of our subsidiaries that own or operate the collateral rigs to declare or pay dividends to their affiliates. The indentures also impose a maximum collateral rig leverage ratio (the “Maximum Collateral Ratio”), represented by the net earnings of the respective collateral rigs relative to the respective debt balance, that changes over the term of the notes. Through March 31, 2020, the Maximum Collateral Ratio under the indenture for the 6.125% Senior Secured Notes is 5.75 to 1.00. Through March 31, 2019, the Maximum Collateral Ratio under the indenture for the 5.875% Senior Secured Notes is 6.00 to 1.00. Exchangeable bonds—In connection with the Songa acquisition transactions, we issued $863 million aggregate principal amount of Exchangeable Bonds, as partial consideration for the Songa shares and as consideration for refinancing certain Songa indebtedness. Transocean Inc., our wholly owned direct subsidiary, is the issuer of the Exchangeable Bonds, for which Transocean Ltd. has provided a full and unconditional guarantee. We are required to pay interest on the Exchangeable Bonds semiannually, beginning on July 30, 2018. The Exchangeable Bonds may be converted at any time prior to the maturity date at an exchange rate of 97.29756 shares per $1,000 note, equivalent to a conversion price of $10.28 per share, subject to adjustment upon the occurrence of certain events. Holders of Exchangeable Bonds may require us to repurchase all or a portion of such holder’s Exchangeable Bonds upon the occurrence of certain events. The aggregate fair value of the Exchangeable Bonds, measured as of the issuance date, was $1.04 billion, which represented a substantial premium of $172 million above par, and we recorded such premium to additional paid‑in capital. We estimated the fair value using significant other observable inputs, representative of a Level 2 fair value measurement, including the terms and credit spreads for the instruments. 5.52% Senior Secured Notes—On May 5, 2017, we issued $410 million aggregate principal amount of 5.52% senior secured notes due May 2022, and in the nine months ended September 30, 2017, we received aggregate cash proceeds of $403 million, net of issue costs. See Note 15—Subsequent Event. Debt assumptions and repayments Senior Secured Term Loans—In connection with the Songa acquisition, we assumed the rights and obligations under credit agreements establishing two senior secured term loan facilities (the “Senior Secured Term Loans”). The credit agreements contained change of control clauses, for which we received waivers from the lenders that were scheduled to expire on August 31, 2018. In the three months ended September 30, 2018, we made an aggregate cash payment of $1.4 billion to repay the borrowings under the Senior Secured Term Loans and recognized an aggregate loss of $1 million associated with the termination of the underlying credit agreements of such loans. Junior Secured Bonds—In connection with the Songa acquisition, we assumed the rights and obligations under a subscription agreement establishing a junior secured bond facility (the “Junior Secured Bonds”). The subscription agreement contained a change of control clause, for which we received waivers from the lenders that were scheduled to expire on August 31, 2018. On February 12, 2018, we served notice of our intent to call the Junior Secured Bonds. On August 20, 2018, we made an aggregate cash payment of $171 million to repay the borrowings under the Junior Secured Bonds and terminated the underlying subscription agreement. Other debt—In connection with the Songa acquisition, we assumed the indebtedness related to two bond loans (together, the “Bond Loans”), previously publicly traded on the Oslo stock exchange. On the acquisition date, the Bond Loans had an aggregate principal amount of NOK 337 million, equivalent to $44 million. On March 14, 2018, we made a cash payment of NOK 345 million, equivalent to $44 million, to repay the Bond Loans. We also assumed the rights and obligations under a credit agreement, which was due to expire March 31, 2018, for a secured borrowing facility. On February 2, 2018, we made a cash payment of $23 million to repay the borrowings outstanding under the secured borrowing facility and terminated the underlying credit agreement. Debt retirements Repurchases and repayments—During the nine months ended September 30, 2018 and 2017, we repurchased in the open market debt securities with aggregate principal amounts as follows (in millions):
|  | Nine months ended |
|  | September 30, |
|  |  | 2018 |  |  | 2017 |
2.50% Senior Notes due October 2017 |  | $ | — |  | $ | 62 |
6.00% Senior Notes due March 2018 |  |  | — |  |  | 35 |
7.375% Senior Notes due April 2018 |  |  | — |  |  | 1 |
6.50% Senior Notes due November 2020 |  |  | — |  |  | 9 |
6.375% Senior Notes due December 2021 |  |  | — |  |  | 7 |
3.80% Senior Notes due October 2022 |  |  | 95 |  |  | 33 |
Aggregate principal amount retired |  | $ | 95 |  | $ | 147 |
Aggregate cash payment |  | $ | 95 |  | $ | 147 |
In the three and nine months ended September 30, 2018, we recognized an aggregate net loss of less than $1 million associated with the retirement of repurchased or repaid debt. In the nine months ended September 30, 2017, we recognized an aggregate net loss of $1 million associated with the retirement of such repurchased debt. Tender offers—In July 2017, we completed cash tender offers to purchase up to $1.5 billion aggregate principal amount of certain notes (the “2017 Tendered Notes”). We received valid tenders from holders of aggregate principal amounts of the 2017 Tendered Notes as follows (in million):
|  | Nine months
|  | ended
|  | September 30,
|  | 2017
2.50% Senior Notes due October 2017 |  | $ | 271
6.00% Senior Notes due March 2018 |  |  | 400
7.375% Senior Notes due April 2018 |  |  | 128
6.50% Senior Notes due November 2020 |  |  | 207
6.375% Senior Notes due December 2021 |  |  | 213
Aggregate principal amount retired |  | $ | 1,219
Aggregate cash payment |  | $ | 1,269
In the three and nine months ended September 30, 2017, we recognized an aggregate net loss of $1 million and $48 million, respectively, associated with the retirement of such validly tendered debt.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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