Seadrill refinances and recapitalises with loan adjustments

Seadrill refinances and recapitalises with loan adjustments

Seadrill has adjusted several of its loan agreements with lenders in order to refinance its business and insulate itself from declines in asset values.

The Fredriksen-led company has extended the maturities of three of its bank loans by up to six months.

A $450m credit facility due to mature in June has been extended until December. Another $400m loan due in December this year has been extended until May 2017. Seadrill’s $2bn credit facility from NADL will now mature in June 2017, rather than April 2017.

The terms of Seadrill’s secured credit facilities have also been amended so that any change in the market value of the company’s rigs will not affect the equity ratio, which has been redefined within the loan covenant.

Seadrill will also no longer be required to prepay amounts to its lenders if rig values decline below a minimum value relative to the loan balance outstanding. The leverage covenant has also been reset.

“This is an important first step in our funding plan. By deferring our imminent borrowing maturities, resetting a number of covenants and removing the risk of facility prepayments related to declining rig values we have established a more stable platform to pursue and conclude negotiations with our stakeholders,” said Mark Morris, Seadrill’s CFO.

To improve its liquidity, the company has decided not to draw down any of the $467m available to it under its revolving credit facilities. It will also extend the minimum liquidity covenant included in its secured credit facilities from $150m to $250m during the negotiating period.

Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.

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