KCA Deutag Finishes Refinancing Process

KCA Deutag Finishes Refinancing Process

Thursday, March 31, 2011
KCA DEUTAG

KCA Deutag announced the completion of a refinancing process. The successful conclusion of this process has resulted in a transaction that strengthens the capital structure of the Company and ensures the long term financial stability of the business.

KCA Deutag will benefit from a strong institutional shareholder base led by existing shareholder Pamplona Capital Management together with funds and accounts managed by GoldenTree Asset Management, EIG Global Energy Partners, and BlackRock Financial Management. Pamplona is the largest shareholder and will have a majority on the new board. The shareholders have equitized mezzanine debt and injected $550 million of new equity into KCA Deutag's holding company Turbo Alpha, of which $300 million will be used to pay down senior debt and $250 million to further develop the business.

Simultaneously, KCA Deutag also confirms that non-executive chairman, Tim Summers, has stepped down following successful conclusion of the restructuring and has been replaced by Alex Knaster from Pamplona Capital. Non-executive directors Chris Hughes and Bob Ellis, appointed at the commencement of the refinancing also step down.

John Halsted of Pamplona commented, "We would like to thank Tim Summers, Chris Hughes and Bob Ellis for their leadership and guidance in steering the Company through a prolonged and intensive refinancing period. The Company has emerged with a significantly strengthened balance sheet, growth capital in the business and an experienced and knowledgeable shareholder base, committed to assisting the Company grow and capitalise on the many opportunities in its core international markets. As shareholders we are very excited about the prospects of the Company in a strongly improving market sector."

Despite the tough economic and trading condition, 2010 was a year in which KCA Deutag delivered robust financial, operational and HSE performance. Compared to our international and US peer group, KCA Deutag mitigated the effects of economic and industry factors better than most, emerging from 2010 with:

• An improved contract backlog. In our platform drilling division almost every contract was extended by negotiation or competitive tender, securing a revenue backlog of more than $1.5 billion, with the major highlight being the award by AIOC in Azerbaijan of a six-rig, five-year plus options contract.
• Continued high utilization in our international land fleet with strategic awards in both northern and southern Iraq and increased activity in Algeria and Nigeria.
• Maintained and extended contracts for all three owned jack-ups.
• Major contract extensions and awards in our engineering division RDS, relating to the UK, Azerbaijan, Newfoundland, Australia and Brazil.
• Significant success in KCA Deutag sister Company Bentec, the specialist rig and drilling equipment manufacturer, with the successful introduction of it's top drive and six rigs currently under construction.
• Best ever company-wide HSE performance.
• Continuous improvement in our operating efficiency and equipment uptime.

Holger Temmen, CEO of KCA Deutag, commented, "We are pleased to have completed the refinancing of the Company and to have emerged with a strengthened balance sheet and debt position. Throughout this period, KCA Deutag's operational and financial performance remained very robust. This performance has been recognized in the many contract extensions and awards given by our clients and our shareholders and lenders also demonstrated their faith in our business plan by approving the build of five new land rigs during 2010 for key growth markets in Europe, Russia and MENA.

"KCA Deutag's strategic presence in the major international markets has allowed us to outperform the majority of our drilling peer group, especially those exposed to the US domestic market. The opportunities developing in markets such as Russia, Iraq, Algeria and the emerging unconventional oil and gas plays in Europe leave me very optimistic about our medium term growth prospects.

"I would like to thank all staff in KCA Deutag, our clients and suppliers for their patience and understanding as we have progressed through the refinancing process. I am delighted that we can now completely focus on delivering the business plan and continuing to meet and exceed our clients' expectations for safe, effective and trouble- free operations."