Offshore drilling firm Pacific Drilling and certain of its subsidiaries have filed for Chapter 11 bankruptcy with the aim to eliminate $1.1 billion debt.
The company, which had previously filed for Bankruptcy in 2017, said Friday that it and certain of its domestic and international subsidiaries had filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas.
Pacific Drilling also said it had entered into a restructuring support agreement with an ad hoc group of the largest holders of its outstanding bond debt.
"This consensual financial restructuring transaction will eliminate the Company’s approximately $1.1 billion in principal amount of outstanding bond debt through the cancellation and exchange of debt for new equity in the reorganized company," Pacific Drilling said.
Business as usual
"With approximately $120 million of cash and cash equivalents as of October 30, 2020, and seven of the most advanced high-specification drillships in the world, Pacific Drilling intends to continue its world-wide operations as usual, deliver services for existing and prospective clients and, subject to court approval, pay all obligations incurred during the Chapter 11 case in full," Pacific Drilling said.
The company said it expected to emerge by year-end with access to new capital in the form of an $80 million exit facility and with approximately $100 million of cash and cash equivalents on the balance sheet.
"Since the beginning of 2020, the global health crisis caused by COVID-19 and the resulting oil supply and demand imbalance have caused significant disruption in world economies and markets, including a substantial decline in the price of oil. The impact of these market conditions on Pacific Drilling’s business has been direct and significantly negative, rendering our current capital structure unsustainable over the long-term," Pacific Drilling said.
Bernie Wolford, Chief Executive Officer, stated, “After spending several months evaluating options for addressing our long-term financial needs in light of challenging market and operational conditions, we are pleased to reach agreement with an ad hoc group of our noteholders that paves the way for an expeditious Chapter 11 restructuring process.
"This restructuring is intended to enhance our financial flexibility by eliminating our entire prepetition debt and cash interest burden. We expect to emerge from this process in a stronger position to compete in today’s challenging, lower-commodity-price environment. I appreciate the ongoing support of our employees, clients and vendors as we complete this accelerated restructuring process. We remain committed to delivering the safest, most efficient and reliable deepwater drilling services in the industry.”