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Debt

3 Months Ended

Mar. 31, 2020

Debt

Debt

Note 7—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
		March 31,			December 31,				March 31,			December 31,
		2020			2019				2020			2019
6.50% Senior Notes due November 2020		$	198		$	206			$	198		$	206
6.375% Senior Notes due December 2021			184			222				184			221
5.52% Senior Secured Notes due May 2022			178			200				176			198
3.80% Senior Notes due October 2022			187			190				186			189
0.50% Exchangeable Bonds due January 2023			863			863				862			862
5.375% Senior Secured Notes due May 2023			519			525				513			518
9.00% Senior Notes due July 2023			—			714				—			701
5.875% Senior Secured Notes due January 2024			626			667				616			656
7.75% Senior Secured Notes due October 2024			420			420				412			412
6.25% Senior Secured Notes due December 2024			437			437				430			430
6.125% Senior Secured Notes due August 2025			501			534				492			525
7.25% Senior Notes due November 2025			750			750				738			737
7.50% Senior Notes due January 2026			750			750				743			743
6.875% Senior Secured Notes due February 2027			550			550				541			541
8.00% Senior Notes due February 2027			750			—				743			—
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				306			306
7.50% Notes due April 2031			588			588				585			585
6.80% Senior Notes due March 2038			1,000			1,000				992			991
7.35% Senior Notes due December 2041			300			300				297			297
Total debt			9,246			9,361				9,157			9,261

Less debt due within one year
6.50% Senior Notes due November 2020			198			206				198			206
5.52% Senior Secured Notes due May 2022			89			88				88			87
3.80% Senior Notes due October 2022			5			—				5			—
5.375% Senior Secured Notes due May 2023			32			16				29			14
5.875% Senior Secured Notes due January 2024			83			83				79			79
7.75% Senior Secured Notes due October 2024			60			60				58			58
6.25% Senior Secured Notes due December 2024			62			62				60			60
6.125% Senior Secured Notes due August 2025			66			66				64			64
Total debt due within one year			595			581				581			568
Total long-term debt		$	8,651		$	8,780			$	8,576		$	8,693

Scheduled maturities—At March 31, 2020, the scheduled maturities of our debt were as follows (in millions):


		Total
Years ending March 31,
2021		$	595
2022			606
2023			1,466
2024			1,020
2025			516
Thereafter			5,043
Total principal amount of debt			9,246
Total debt-related balances, net			(89)
Total carrying amount of debt		$	9,157

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”), and in May, July, September and December 2019, we amended the terms of the Secured Credit Facility to, among other changes, increase the borrowing capacity to $1.3 billion and add to and clarify the lender parties and their respective commitments under the facility. The Secured Credit Facility is scheduled to expire on June 22, 2023. The Secured Credit Facility is guaranteed by Transocean Ltd. and certain wholly owned subsidiaries. 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 3.375 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 March 31, 2020, based on the credit rating of the Secured Credit Facility on that date, the Secured Credit Facility Margin was 2.875 percent and the facility fee was 0.625 percent. At March 31, 2020, we had no borrowings outstanding, $7 million of letters of credit issued, and we had $1.3 billion of available borrowing capacity under the Secured Credit Facility.

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 March 31, 2020, 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.

Exchangeable bonds—The 0.50% exchangeable senior bonds due January 30, 2023 (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.

Debt issuances

Priority guaranteed senior unsecured notes—On January 17, 2020, we issued $750 million aggregate principal amount of 8.00% senior unsecured notes due February 2027 (the “8.00% Senior Notes”), and we received aggregate cash proceeds of $743 million, net of issue costs. The 8.00% Senior Notes are fully and unconditionally guaranteed by Transocean Ltd. and certain wholly owned subsidiaries of Transocean Inc. Such notes rank equal in right of payment to all of our existing and future unsecured unsubordinated obligations and rank structurally senior to the extent of the value of the assets of the subsidiaries guaranteeing the notes. We may redeem all or a portion of the 8.00% Senior Notes on or prior to February 1, 2023 at a price equal to 100 percent of the aggregate principal amount plus a make-whole provision, and subsequently, at specified redemption prices. The indenture that governs the 8.00% Senior Notes contains covenants that, among other things, limit our ability to incur certain liens on our drilling units without equally and ratably securing the notes, engage in certain sale and lease back transactions covering any of our drilling units, allow our subsidiaries to incur certain additional debt, and consolidate, merge or enter into a scheme of arrangement qualifying as an amalgamation.

Senior secured notes—On February 1, 2019, we issued $550 million aggregate principal amount of 6.875% senior secured notes due February 2027 (the “6.875% Senior Secured Notes”), and we received aggregate cash proceeds of $539 million, net of discount and issue costs. The 6.875% Senior Secured Notes are secured by the assets and earnings associated with the ultra-deepwater floater Deepwater Poseidon and the equity of the wholly owned subsidiaries that own or operate the collateral rig. Additionally, we were required to deposit $19 million in restricted cash accounts to satisfy debt service requirements. We are required to pay semiannual installments of (a) interest only through August 2021 and (b) principal and interest thereafter. We may redeem all or a portion of the 6.875% Senior Secured Notes on or prior to February 1, 2022 at a price equal to 100 percent of the aggregate principal amount plus a make-whole provision, and subsequently, at specified redemption prices.

Debt retirements

Redemption—On January 17, 2020, we provided a notice to redeem in full our outstanding 9.00% senior notes due July 2023 (the “9.00% Senior Notes”). On February 18, 2020, we made a payment of $767 million, including the make-whole provision, to redeem the 9.00% Senior Notes, and in the three months ended March 31, 2020, we recognized a loss of $65 million associated with the retirement of debt.

Repurchases—During the three months ended March 31, 2020, we repurchased in the open market debt securities with aggregate principal amounts as follows (in millions):


					Three months
					ended
					March 31,
					2020
6.50% Senior Notes due November 2020					$	8
6.375% Senior Notes due December 2021						38
3.80% Senior Notes due October 2022						3
5.375% Senior Secured Notes due May 2023						6
Aggregate principal amount retired					$	55

Aggregate cash payment					$	46
Aggregate net gain					$	8

Tender offers—On February 5, 2019, we completed cash tender offers to purchase certain notes (the “2019 Tendered Notes”). We received valid tenders from holders of aggregate principal amounts of the 2019 Tendered Notes as follows (in millions):


		Three months
		ended
		March 31,
		2019
6.50% Senior Notes due November 2020		$	57
6.375% Senior Notes due December 2021			63
3.80% Senior Notes due October 2022			190
9.00% Senior Notes due July 2023			200
Aggregate principal amount retired		$	510

Aggregate cash payment		$	522
Aggregate net loss		$	(18)