Offshore drilling contractor Seadrill has agreed with stakeholders to raise US$350M and reduce its liabilities by nearly US$5Bn as it looks to emerge from Chapter 11 bankruptcy
The company has agreed to a plan support agreement (PSA) with senior secured lenders holding 57.8% of the company’s senior secured loans and a backstop commitment letter entered into with some consenting lenders.
Certain consenting lenders have also agreed to backstop a first lien exit facility totalling US$300M. The lenders participating in (and backstopping) the new-money facility will collectively receive 16.75% of new equity in the newly constituted Seadrill, subject to dilution.
The senior secured lenders will exchange US$5.6Bn of existing debt for US$750M of second-lien, takeback debt and 83% of the new equity, subject to dilution.
Seadrill’s largest shareholder, the John Friedrisksen investment company Hemen Holding has also committed to fund a US$50M new-money unsecured bond to be issued under the reorganisation plan, which is convertible into 5% of the new equity under specified circumstances.
Seadrill chief executive Stuart Jackson said "We are pleased to announce that we have reached a consensual deal with a large element of Seadrill’s secured lenders that will pave the way for a significant balance sheet deleveraging.
It has taken time to reach the right outcome but throughout the process we have maintained strong support from our creditors and we look forward to maintaining that as they become our shareholders as well as our lenders.
I would also like to thank our employees, our customers and our suppliers for maintaining their focus on safe, efficient operations throughout this time. We should not lose sight of the fact that we collectively provide vital services in difficult circumstances on a daily basis. This dedication, coupled with our restructured balance sheet, will allow Seadrill to emerge from Chapter 11 as a stronger company and play its part in the necessary industry consolidation.”
In all, the agreements will see a reorganisation of finances that will raise US$350M in new financing and reduce company liabilities by over US$4.9Bn.
Seadrill has filed the reorganisation plan, disclosure statement, and related documents in the United States Bankruptcy Court for the Southern District of Texas and will proceed to obtain Bankruptcy Court approval of the same.
The PSA includes a milestone for Bankruptcy Court approval of the Plan by 5 November 2021.
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