Pacific Drilling emerges from bankruptcy

Offshore driller Pacific Drilling and certain of its affiliated Chapter 11 debtors have emerged from bankruptcy after successfully completing restructuring transactions pursuant to their Chapter 11 plan of reorganization. 

Drillship Pacific Bora in Singapore waters; Source: Wikimedia; Author: Jacklee – under the CC BY-SA 3.0 license

Pacific Drilling filed petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in November 2017 with a plan to use the Chapter 11 process to pursue a comprehensive restructuring of the company’s approximately $3 billion in principal amount of outstanding funded debt.

On August 1, 2018, the driller announced it had filed a plan of reorganization in its Chapter 11 proceedings. The company received full support from its largest shareholder later that month.

In connection with emergence from bankruptcy announced on Monday, November 19, the company raised $1.5 billion in gross proceeds in new capital, consisting of $1 billion of new secured notes and $500 million of equity.

Pursuant to the plan, the company equitized approximately $1.85 billion in pre-petition debt associated with the company’s Term Loan B, 2017 Notes and 2020 Notes, and paid in full approximately $1.2 billion of debt related to its pre-petition senior secured credit facility, revolving credit facility and the post-petition debtor-in-possession financing. Customer, employee and ordinary trade claims were unimpaired.

According to the driller, the plan has strengthened the company’s balance sheet by significantly reducing its leverage and enhancing its liquidity, with approximately $400 million in cash upon emergence and no debt maturities until late 2023, positioning the company to take advantage of its high-specification deepwater drillship fleet in anticipation of an improving market for offshore drilling services.

Following a reverse stock split and the issuances of common shares in connection with the plan, the company has approximately 75.0 million shares outstanding. The company’s shares prior to the company’s emergence from the Chapter 11 proceedings have been diluted such that they represent in the aggregate less than 0.003% of the company’s outstanding shares.

New leadership

In accordance with the plan, a newly constituted board of directors of the company was appointed, consisting of W. Matt Ralls (Chairman), Bernie G. Wolford Jr. and David Weinstein as Class A Directors and Daniel Han, Donald Platner and Kiran Ramineni as Class B Directors.

In addition, the company said on Monday that Bernie G. Wolford Jr. has been appointed Chief Executive Officer of the company, effective immediately. Wolford succeeds Paul T. Reese, who served as Chief Executive Officer of the Company since August 2017.

Prior to joining the company, Wolford served as Senior Vice President – Operations of Noble Corporation since February 2012 and Vice President – Operational Excellence from March 2010 to February 2012. Wolford began his career in the offshore drilling industry with Transworld Drilling Company in 1981, which was subsequently acquired by Noble.

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