Seadrill Wins Acceptance of Plan to Emerge from Bankruptcy
Seadrill cleared another important hurdle in its efforts to emerge from its second bankruptcy proceeding in the past four years. The company announced the preliminary results from the vote by its creditors and shareholders saying that it had won overwhelmingly acceptance for the reorganization plan. This came just days after the company had told the court it might require additional time to win acceptance from all the parties involved.
The deadline for creditors to have submitted votes on the plan was October 7. Seadrill is now reporting that all voting classes of stakeholders accepted the plan, including all 12 credit facilities and general unsecured creditors and shareholders. Over 96 percent of secured lenders voted, and over 88 percent of secured lenders accepted the plan. The final results of the vote remain to be certified by the balloting agent, which is due to report to the United States Bankruptcy Court for the Southern District of Texas by October 22.
Earlier last week, Seadrill’s lawyers had filed with the bankruptcy court saying that it was still trying to secure as much support as possible for its proposed reorganization plan. The filing said that 58 percent of senior lenders were backing the restructuring plan and the company asked for up to four additional months to continue to manage the reorganization process.
Grant Creed, CFO, commented today, “The near-unanimous acceptance of the plan by our lenders is another important step towards Seadrill’s emergence from chapter 11. This has been a long journey to deliver broad support across our creditor constituency, but I am confident that our eventual emergence will place us back at the heart of a sector collectively going through significant re-adjustment and reinforce our position as a market leader.”
Based on the expected results of the vote, Seadrill is on track to have its reorganization plan confirmed at a court hearing scheduled for October 26. If the plan is confirmed by the court, Seadrill is targeting exiting chapter 11 proceedings approximately 60 days thereafter, subject to certain customary conditions, including certain antitrust approvals.
The goal of the plan is to reduce the company's $6.1 billion debt by approximately $4.9 billion and supply $350 million in new financing. Seadrill will be controlled by its senior lenders with current shareholders’ position dropped to approximately a quarter of one percent of the company’s equity. Famed investor John Fredriksen largely surrenders his position in the company with only a small share of the new equity and participation in a small unsecured debt that would convert to shares.
As part of the reorganization plan, Seadrill has proposed recycling 10 of its vessels from its fleet that had number 42 rigs. So far, two rigs have been sold and five are in the process of being recycled. The fleet includes 7 drillships, 15 jack-up rigs, and 12 semi-submersibles.