Seadrill files for bankruptcy

Seadrill has filed for bankruptcy protection, as investors fork up US$1.06 billion of new capital for the company.

Anton Dibowitz. Image from Seadrill.

The company signed deals with more than 97% of its secured bank lenders, about 40% of its bondholders, and a consortium of investors led by its largest shareholder, Hemen Holding Ltd. that delivers $1.06 billion of new capital comprised of $860 million of secured notes and $200 million of equity, the company said yesterday (12 September).

Banks have agreed to defer maturities of all secured credit facilities, totaling $5.7 billion, by approximately five years with no amortization payments until 2020 and significant covenant relief.

Additionally, Seadrill’s $2.3 billion of unsecured bonds and other unsecured claims will be converted into approximately 15% of the post-restructured equity.

By extending and re-profiling the secured bank debt, reducing leverage and delivering a significant amount of new capital, this agreement provides Seadrill with a five-year runway.

Post-restructuring, Seadrill expects to have a strong cash position and good liquidity to take advantage when the market recovers, the company said.

To implement the restructuring agreement, Seadrill filed prearranged chapter 11 cases in the Southern District of Texas together with the agreed restructuring plan yesterday.

As part of the chapter 11 cases, the Seadrill filed “first day” motions that, when granted, will enable the company’s day-to-day operations to continue as usual.

Seadrill requested authority to pay its key trade creditors and employee wages and benefits without change or interruption. Additionally, the company expects it will pay all suppliers and vendors in full under normal terms for goods and services provided during the chapter 11 cases.

“This is a testament to our position in the sector, having a large, modern fleet, a top-quality customer base and a proven operating track record. With our improved capital structure, we will be in a strong position to capitalize when the market recovers,” Anton Dibowitz, CEO and president of Seadrill Management Ltd. said. “The continued focus and dedication of all our employees throughout this process has been exceptional. It is due to our people’s commitment to deliver safe, efficient operations day in, day out that we have succeeded in reaching this restructuring agreement.”