Seadrill moves closer to filing for chapter 11

John Fredriksen’s Seadrill went a step closer to filing for chapter 11 today, moving to ring-fence a subsidiary.

The drilling rig outfit, weighed down by debts of more than $10bn, revealed it has completed amendments to three secured credit facilities that relate to rigs purchased by subsidiary Seadrill Partners from the company in a move it said would insulate Seadrill Partners from events of default related to the company’s likely use of chapter 11 proceedings to implement its restructuring plan.

The amendments to the three facilities remove Seadrill Partners and its consolidated entities as a borrower or guarantor and separate the facilities so that each resulting Seadrill Limited facility is secured only by Seadrill Limited’s assets without recourse to Seadrill Partners or its assets.

“This transaction is part of the Company’s comprehensive restructuring plan that is intended to preserve the value of its equity stakes in Seadrill Partners and its consolidated entities,” Seadrill said in a release adding that discussions continue with investors and secured lenders on the terms of a comprehensive recapitalisation.

Seadrill reemphasised today that restructuring will likely involve chapter 11 proceedings.

“It is likely that the comprehensive restructuring plan will require a substantial impairment or conversion of our bonds, as well as impairment and losses for other stakeholders, including shipyards. As a result, the Company currently expects that shareholders are likely to receive minimal recovery for their existing shares,” Seadrill warned.

The restructuring of Seadrill has been the most complex financial manoeuvre in John Fredriksen’s 50-plus year career in shipping, the tycoon revealed earlier this year.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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