John Fredriksen-controlled offshore driller Seadrill has received approval from a court in Texas for its proposed restructuring plan, setting the stage for the company’s emergence from chapter 11 in the fourth quarter of this year.
The offshore driller, which is in its second bankruptcy proceedings in the US in a few years, secured the backing of just under 60% of the lenders in July for a restructuring scheme that would leave the current shareholders with just 0.25% of the company.
The lenders who have accepted the deal will guarantee a loan facility of $300m and will be entitled to approximately 17% of the newly constituted Seadrill. They would also convert some $5.6bn of debt into second-priority loans of $750m and approximately 83% of the company’s shares.
John Fredriksen, however, would remain with Seadrill with an unsecured bond loan of $50m, convertible into 5% of the new equity.
Grant Creed, CFO, commented: “We are pleased with these developments, which put us firmly on track for chapter 11 emergence. The Court approved our timeline for approval of the restructuring and authorized us to solicit lender votes. This will pave the way for a significant balance sheet deleveraging.”
The assets of the financially troubled Seadrill have been linked to several competitor drillers, including Noble and Transocean, Dolphin Drilling, and a third undisclosed partner who had been bidding to take over its rigs since May and July, respectively.
Seadrill filed for its second chapter 11 in February this year. The restructuring plan is supported by 58% of creditors but needs two-thirds of each of the company’s twelve loans. The court has set a hearing to consider approval of the plan for October 26, 2021.