Published Date : Sep 13, 2017
After 18 months spent by the chairman John Fredriksen to find a debt deal, the billionaire has decided to put Seadrill Ltd. up for bankruptcy. Under the proposal, new money worth US$1 billion will be injected into the company, while lenders will extend the maturity on the total debt of US$5.7 billion and no amortization payments until 2020. This new investment will be broken down into US$860 million in secured notes and US$200 million in equity. As per the statement by Seadrill, if the low-ranked creditors do join the new proposal, US$2.3 billion can be converted in unsecured bonds, an equivalent of 15% stake in the company.
Most of the new money has been courtesy Hemen Holding Ltd, the largest stockholder in Seadrill. According to the CEO Anton Dibowitz, more than 40% of bondholders have agreed to the new plan, besides 97% of Seadrill’s secured bank lenders.
Going forward, Seadrill must obtain court permission to go through with the signing of lender proposal. The restructured reorganization plan will then go to the company’s creditors for a session of voting. The judge will take account of this voting result to allow the proposed plan to materialize.
Kirkland & Ellis LLP hired as Bankruptcy Law Firm
For the past year and half, Fredriken has been aspiring to achieve a deal with creditors, since Seadrill announced self-imposed deadline for September 12 to file a Chapter 11 reorganization case. In its petition, filed in the federal court in Victoria, Texas, the company has mentioned an exuberant list of debt and assets, ranging from US$10 billion to US$50 billion. Seadrill’s biggest unsecured creditor is Deutsche Bank Trust Co., which has bond debt totaling US$1.74 billion. Kirkland & Ellis LLP has been hired by Seadrill as its bankruptcy law firm, Alvarez & Marsal as restructuring adviser, and Houlihan Lokey Inc. as financial adviser.