Seadrill Expects to Emerge from Bankruptcy This Week
A year after filling for its second trip through bankruptcy court, Seadrill announced that it expects to emerge from the current proceedings by the end of this week. The company has been working to meet the conditions of the plan that was agreed to with its creditors last fall and approved by the bankruptcy court in October 2021.
Citing the prolonged downturn in the oil market coupled with the impact of COVID-19 pandemic, Seadrill filed for bankruptcy along with most of its affiliated companies in February 2021. At the time, the company reported that it had approximately $7.3 billion in debt. The company had previously worked out forbearance agreements with its lenders seeking to further push back the maturities on $5.7 billion of the bank debt which had been delayed to 2022 in the previous bankruptcy action four years earlier.
Under the terms of the new agreement approved by the court, a new public-traded holding company will be formed which they intend to list on the Euronext Expand market in Oslo in the second quarter of 2022. The new Seadrill Limited will have approximately 50 million new common shares outstanding, of which only a quarter of one percent (0.25%) will be allocated to existing shareholders of the company with the lenders controlling the new company. The goal of the plan was to reduce the company's debt by approximately $4.9 billion and supply $350 million in new financing.
As part of the reorganization plan, Seadrill proposed recycling 10 of its vessels from its fleet that had number 42 rigs before the filing. During the process, they reported that they had sold two rigs and were recycling an additional five. The fleet currently numbers 34 owned vessels, including drillships, jack-up rigs, and semi-submersibles. Earlier this week, SFL Corporation announced it would replace Seadrill with Odfjell Drilling for the management of one of the rigs.
Famed investor John Fredriksen surrendered his position in the company as part of the bankruptcy proceeding and a new board and CEO is being appointed. Fredriksen however is slated to retain a smaller unsecured bond loan of $50 million which subject to certain conditions could be converted into five percent of the new equity in the future.
Trading in the existing shares in Seadrill on the Oslo Stock Exchange will be suspended following the effective date of emerging from Chapter 11. The company says that it expects in the future to complete an uplisting to the main market of the Oslo Stock Exchange, as well as a listing on the New York Stock Exchange.