NOTE 5 – LONG-TERM DEBT

Long-term debt at December 31 consisted of the following (in thousands):

	2012		2011

5.88% Title XI note payable, due March 2012, secured by the Gorilla VI	$	-	$	7,109
2.80% Title XI note payable, due October 2013, secured by the Gorilla VII		-		30,898
5% Senior Notes, due September 2017 ($400 million principal amount; 5.1% effective rate)		398,678		398,394
4.33% Title XI note payable, due May 2019, secured by the Scooter Yeargain		-		45,598
7.875% Senior Notes, due August 2019 ($500 million principal amount; 8.0% effective rate)		497,842		497,511
3.525% Title XI note payable, due May 2020, secured by the Bob Keller		-		50,801
3.158% Title XI note payable, due July 2021, secured by the Bob Palmer		-		104,047
4.875% Senior Notes, due June 2022 ($700 million principal amount; 4.6% effective rate)		714,775		-
5.4% Senior Notes, due December 2042 ($400 million principal amount; 5.4% effective rate)		398,303		-
Total long-term debt		2,009,598		1,134,358
Less: Current maturities		-		(45,023	)
Long-term debt, excluding current maturities	$	2,009,598	$	1,089,335

As of December 31, 2012, no principal payments are required with respect to our outstanding debt through 2016; $400 million becomes due in September 2017.

In April 2012, the U.S. Department of Transportation Maritime Administration (MarAd), which had previously guaranteed certain of the Company's debt securities under the Title XI Federal Ship Financing Program (the Title XI Notes), denied the Company's request for consent with respect to a parent company guarantee in connection with the Company's redomestication. As a result, the Company redeemed $226.1 million aggregate principal amount of the Title XI Notes in 2012 for $251.5 million in cash, including principal, make-whole premiums and accrued interest, and recognized a pretax loss on debt extinguishment of $22.2 million, including $0.7 million of noncash deferred financing costs.

In connection with the redomestication, on May 4, 2012, Rowan UK became a party to and a borrower and guarantor under the credit facility, dated September 16, 2010, among Rowan Delaware, Wells Fargo Bank, National Association, as administrative agent and lender, and certain other lenders. Rowan UK entered into a guaranty in favor of the administrative agent for the benefit of the lenders whereby Rowan UK fully and unconditionally guarantees the obligations of Rowan Delaware under the credit facility.

On May 21, 2012, Rowan UK, as guarantor, and its 100% owned subsidiary, Rowan Delaware, as issuer, completed the issuance and sale in a public offering of $500 million aggregate principal amount of 4.875% Senior Notes due 2022 (the 4.875% Notes), at a price to the public of 99.333% of the principal amount. Net proceeds were approximately $493 million, which were used, in part, to replenish cash used to redeem the Title XI Notes.

On December 11, 2012, Rowan UK, as guarantor, and its 100% owned subsidiary, Rowan Delaware, as issuer, completed the issuance and sale in a public offering of $200 million aggregate principal amount of 4.875% Senior Notes due 2022 at a price to the public of 109.007% of the principal amount and $400 million aggregate principal amount of 5.4% Senior Notes due 2042 at a price to the public of 99.575% of the principal amount (the "December offering"). The 4.875% Senior Notes issued in December 2012 were offered as additional notes under the indenture governing the $500 million principal amount of notes of the same series issued in May 2012. Net proceeds of the December offering were approximately $611 million, which will be used in the Company's rig construction program and for general corporate purposes.

The 4.875% Notes and the 5.4% Notes will mature on June 1, 2022, and December 1, 2042, respectively. Interest on the 4.875% Notes and the 5.4% Notes is payable semi-annually on June 1 and December 1 of each year.

The 4.875% Notes and the 5.4% Notes are Rowan Delaware's senior unsecured obligations and rank senior in right of payment to all of its subordinated indebtedness and pari passu in right of payment with any of Rowan Delaware's existing and future senior indebtedness, including its 5% Senior Notes due 2017, 7.875% Senior Notes due 2019, and any indebtedness under Rowan Delaware's senior revolving credit facility. The 4.875% Notes and the 5.4% Notes rank effectively junior to Rowan Delaware's future secured indebtedness, if any, to the extent of the value of its assets constituting collateral securing that indebtedness and to all existing and future indebtedness of its subsidiaries (other than indebtedness and liabilities owed to Rowan Delaware).

All or part of the 4.875% Notes and 5.4% Notes may be redeemed at any time for an amount equal to 100% of the principal amount plus accrued and unpaid interest to the redemption date plus the applicable make-whole premium, if any. There will be no make-whole premium applicable to the redemption of the 4.875% Notes on or after March 1, 2022, or applicable to redemption of the 5.4% Notes on or after June 1, 2042.

The 5% Senior Notes due 2017, 7.875% Senior Notes due 2019, 4.875% Senior Notes due 2022, and 5.4% Senior Notes due 2042 (together, the "Senior Notes") are fully and unconditionally guaranteed on a senior and unsecured basis by Rowan UK (see Note 15).

On December 4, 2012, the Company entered into the third amendment to the credit agreement dated September 16, 2010, that, among other things, increased the borrowing capacity under the revolving credit facility from $500 million to $750 million and provides for an accordion feature that would permit the borrowing capacity to be increased to a maximum of $1.0 billion, subject to the consent of the lenders. There were no amounts drawn under the revolving credit facility at December 31, 2012.

Our debt agreements contain provisions that limit the amount of long-term debt, limit the ability of the Company to create liens that secure debt, engage in sale and leaseback transactions, merge or consolidate with another company and, in the event of noncompliance, restrict investment activities and asset purchases and sales, among other things. Additionally, the revolving credit facility agreement provides that the facility will not be available in the event of a material adverse change in the Company's condition, operations, business, assets, liabilities or ability to perform. The Company was in compliance with its debt covenants at December 31, 2012.