Seadrill files Chapter 11, enters restructuring

Seadrill Ltd., Hamilton, Bermuda, has filed prearranged Chapter 11 cases in the Southern District of Texas along with an agreed upon restructuring plan.

Seadrill Ltd., Hamilton, Bermuda, has filed prearranged Chapter 11 cases in the Southern District of Texas along with an agreed upon restructuring plan.

The company also filed first-day motions that will enable its day-to-day operations to continue as usual. Seadrill says it has more than $1 billion in cash and will not need debtor-in-possession financing.

The restructuring agreement involves more than 97% of its secured bank lenders, 40% of its bondholders, and a consortium of investors led by its largest shareholder, Hemen Holding Ltd.

The agreement provides Seadrill $1.06 billion of capital consisting of $860 million of secured notes and $200 million of equity. The company’s secured lending banks have agreed to defer maturities of all secured credit facilities, totaling $5.7 billion, by 5 years with no amortization payments until 2020 and significant covenant relief.

Also, assuming unsecured creditors support the plan, the company’s $2.3 billion of unsecured bonds and other unsecured claims will be converted into 15% of the post-restructured equity with participation rights in both the new secured notes and equity, and holders of Seadrill common stock will receive 2% of the post-restructured equity.

Seadrill says the restructuring plan was developed over the course of more than a year of discussions. The company has a fleet of 68 drilling units, including drillships, jack ups, semisubmersibles, and tender rigs for operations in shallow to ultradeepwater areas in both harsh and benign environments.

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