Shareholders the biggest losers as Seadrill prepares for Chapter 11

John Fredriksen’s Seadrill says that it is preparing to implement a restructuring plan which will likely involve schemes of arrangement or chapter 11 proceedings.

The offshore driller has been given a three-month extension by its banking group to implement a restructuring plan, and now has until the end of July. It has also reached agreement to extend the maturity dates of three credit facilities worth close to $3bn and extend related covenant amendments and waivers expiring on June 30.

Seadrill says the extensions will give it time to further advance ongoing negotiations with its banks, potential new money investors, and the advisers to the ad hoc committee of bondholders regarding the terms of a comprehensive restructuring plan, which may include the infusion of new capital.

Seadrill says that while terms of the restructuring have yet to be reached, the plan will require a substantial impairment or conversion of its bonds, as well as impairment, losses or substantial dilution for other stakeholders.

It also said that shareholders are likely to receive minimal recovery for their existing shares.

The news follows hot on the heels of another famous shipping magnate forced into chapter 11 over filed rig investments. The market is still digesting last week’s news from George Economou’s Ocean Rig bankruptcy filing.

Grant Rowles

Grant spent nine years at Informa Group based in London, Sydney, Hong Kong and Singapore. He gained strong management experience in publishing, conferences and awards schemes in the shipping and legal areas, working on a number of titles including Lloyd's List. In 2009 Grant joined Seatrade responsible for the commercial development of Seatrade’s Asia products. In 2012, with Sam Chambers, he co-founded Asia Shipping Media.
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