Seadrill, a cash-strapped offshore driller, has been given some breathing space in an effort to restructure its reported $14 billion debt.
The company, which has been in talks with creditors for months, on Wednesday said it had reached an agreement with its bank group to extend the comprehensive restructuring plan negotiating period until September 12, 2017.
Furthermore, Seadrill received lender consent to extend the maturity date under the US$400 million credit facility from 31 August 2017 until September 14, 2017.
Seadrill said that in relation to the West Eminence loan facility, the company has received the support of lenders representing 84% of the exposure under the US$450 million credit
facility maturing on 15 August 2017 to extend the maturity date to September 14, 2017.
The company, which had expected to close the restructuring talks by April 2017, has now said it expects that a scheme of arrangement under section 99 of the Companies Act 1981 of Bermuda, which requires a majority in number of the lenders representing 75% in value, will be used to implement the extension of the US$450m Facility if an acceptable maturity extension agreement is not reached.
No joy for existing shareholders
Since the start of talks a few months back, Seadrill has been saying the final solution might lead to significant losses for the existing shareholders and may include chapter 11 proceedings.
The company has reiterated the stance saying:”As previously disclosed, we continue to believe that implementation of a comprehensive restructuring plan will likely involve chapter 11 proceedings, and we are preparing accordingly. The extension provides additional time to finalise negotiations and prepare for the necessary potential implementation filings.
“It is likely that the comprehensive restructuring plan will require a substantial impairment or conversion of our bonds, as well as impairment and losses for other stakeholders, including shipyards. As a result, the company currently expects that shareholders are likely to receive minimal recovery for their existing shares,” Seadrill said.
According to Seadrill’s latest rig fleet status update, the driller, along with its subsidiaries, had no less than 14 offshore rigs listed as under construction in yards in Korea and China.
The driller has been in talks with the yards regarding reaching agreements to defer the rig deliveries further into the future, waiting for the better times in the offshore oil and gas drilling market, which has been hit by the lack of demand caused by the low oil prices, coupled with an oversupply of the rigs in the market.
Apart from the latest announced debt maturity delays, Seadrill said it was in advanced discussions with certain third party and related party investors and its secured lenders on the terms of a comprehensive recapitalization, which remain subject to further negotiation, final due diligence, documentation and requisite approvals.
Seadrill’s share price fell from a high of 289 Norwegian crowns in September 2013, to the low point of 2,86 crowns in mid-July 2017. The price was 3.4 NOK as of Wednesday morning.
Offshore Energy Today Staff