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| Debt | Note 7—Debt Overview Outstanding debt—The aggregate principal amounts and aggregate carrying amounts, including a bifurcated compound exchange feature and unamortized debt-related balances, such as discounts, premiums and issue costs, were as follows (in millions):
Scheduled installments and maturities—At September 30, 2026, scheduled repayments were as follows (in millions):
Credit agreement Secured Credit Facility—We have a secured revolving credit facility (the “Secured Credit Facility”) established under a bank credit agreement (as amended from time to time, the “Existing Credit Agreement”), which has a borrowing capacity of $510 million through its maturity on June 22, 2028. 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. We may borrow under the Secured Credit Facility at a forward-looking term rate based on the secured overnight financing rate (“Term SOFR”) plus a margin and a spread adjustment of 0.10 percent. The Secured Credit Facility is subject to permitted extensions and certain early maturity triggers, including if on any date the aggregate amount of scheduled principal repayments of indebtedness, with certain exceptions, due within 91 days thereof is equal to or in excess of $325 million and available cash is less than $250 million. The Secured Credit Facility permits us to increase the aggregate amount of commitments by up to $250 million. The Secured Credit Facility is guaranteed by Transocean Ltd. and certain wholly owned subsidiaries. At September 30, 2026, based on the credit rating of the Secured Credit Facility as of that date, the Secured Credit Facility Margin was 2.75 percent and the facility fee was 0.50 percent. At September 30, 2026, we had no borrowings outstanding, $97 million of letters of credit issued, and we had $413 million of available borrowing capacity under the Secured Credit Facility. Subsequent event—On October 15, 2026, we entered into an amended and restated bank credit agreement (the “Amended and Restated Credit Agreement”), which, upon its effectiveness, will amend and restate the Existing Credit Agreement. The effectiveness of the Amended and Restated Credit Agreement is subject to the closing of the Business Combination and the satisfaction or waiver of other conditions customary for a secured credit facility. Upon its effectiveness, the Amended and Restated Credit Agreement will, among other things, (a) extend the scheduled maturity date to October 2031 from June 2028, (b) increase the total amount of revolving commitments thereunder to $750 million from $510 million and (c) modify certain covenants and other terms thereunder. Under the Amended and Restated Credit Agreement, borrowings will continue to be guaranteed by Transocean Ltd. and certain wholly owned subsidiaries and secured by certain drilling rigs and related collateral. The Existing Credit Agreement remains in full force and effect until the Amended and Restated Credit Agreement becomes effective. The lenders’ commitments under the Amended and Restated Credit Agreement will automatically terminate if the conditions to its effectiveness are not satisfied or waived by May 9, 2027. Exchangeable bonds Interest expense—The 4.625% senior guaranteed exchangeable bonds due September 2029 (the “4.625% Exchangeable Bonds”) have an effective interest rate of 18.3%. We recognized interest expense for our exchangeable bonds as follows (in millions):
Bifurcated exchange feature and estimated fair value—Effective March 30, 2026, we may redeem for cash all or a portion of the 4.625% Exchangeable Bonds at a price equivalent to the aggregate principal amount to be redeemed if the closing price of our shares has been greater than 115 percent of the exchange price for a period of at least 20 trading days. If we give notice of our election to exercise the right to redeem, the indenture governing the 4.625% Exchangeable Bonds contains a compound exchange feature that, in addition to the exchange terms presented below, requires us to pay a make-whole premium of future interest through March 30, 2028 to any holders that exercise their right to exchange during the redemption notice period. Such compound exchange feature must be bifurcated from the host debt instrument since it is not considered indexed to our stock. Accordingly, we recognize changes to the liability for the estimated fair value of the bifurcated compound exchange feature with a corresponding adjustment to interest expense. At September 30, 2026 and December 31, 2025, the carrying amount of the bifurcated compound exchange feature, recorded as a component of the carrying amount of debt, was $167 million and $126 million, respectively. At September 30, 2026, the estimated fair value of the 4.625% Exchangeable Bonds was $412 million. We estimated the fair value of the exchangeable debt instrument, including the exchange feature, by employing a binomial lattice model using significant other observable inputs, representative of Level 2 fair value measurements, including the terms and credit spreads of our debt and the expected volatility of the market price for our shares. Exchange terms—At September 30, 2026, the 4.625% Exchangeable Bonds had the following exchange terms: (a) an exchange rate of 290.6618 Transocean Ltd. shares per $1,000 note, (b) an implied exchange price of $3.44 per Transocean Ltd. share and (c) an aggregate of 75.3 million shares issuable upon exchange of our exchangeable bonds. The exchange rate is subject to adjustment upon the occurrence of certain events. The 4.625% Exchangeable Bonds may be exchanged by holders at any time prior to the close of business on the second business day immediately preceding the maturity date or redemption date and, at our election, such exchange may be settled by delivering cash, Transocean Ltd. shares or a combination of cash and shares. Exchanges—In the nine months ended September 2025, we entered into separate, individually negotiated agreements (as amended, the “Exchange Agreements”) with certain holders of the 4.00% senior guaranteed exchangeable bonds due December 2025 (the “4.00% Exchangeable Bonds”). In the nine months ended September 30, 2025, the holders exchanged $196 million aggregate principal amount of 4.00% Exchangeable Bonds under the terms of the Exchange Agreements and received an aggregate 73.3 million Transocean Ltd. shares, which included an aggregate 35.9 million shares incremental to the number of shares issuable pursuant to the governing indenture based upon the principal amount exchanged. In the three and nine months ended September 30, 2025, we recognized a loss of $75 million and $99 million, respectively, recorded in other, net, which had no net tax effect, associated with these transactions. See Note 12—Equity. Redemption and retirement Early retirement—In March 2026, we made a cash payment of $365 million, including an early redemption premium, to retire the outstanding $358 million aggregate principal amount of the 8.375% senior secured notes due February 2028. In the nine months ended September 30, 2026, as a result of the early redemption, we recognized a loss of $11 million, which had no net tax effect, associated with the retirement of debt. Subsequent event—In October 2026, we made a cash payment of $168 million, including an early redemption premium, to retire the outstanding $165 million aggregate principal amount of the 8.00% senior secured notes due September 2028. |
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