Pacific Drilling exits bankruptcy, cuts over $1 billion of debt

By Sarah Lizee

Olympia, Wash., Dec. 31 – Pacific Drilling SA has emerged from the Chapter 11 process and completed its balance sheet restructuring, according to a Thursday press release.

The modified first amended joint plan of reorganization was confirmed by the U.S. Bankruptcy Court for the Southern District of Texas on Dec. 21.

Under the plan, all of the company’s outstanding common shares were deemed to have no value and received no recovery.

Pacific has a new parent company, Pacific Drilling Co. LLC, the equity of which is owned by former creditors of the company and its debtor affiliates.

The company eliminated more than $1 billion of funded debt obligations under the plan and now has roughly $100 million in cash on hand as well as access to an undrawn $80 million senior secured delayed-draw term loan exit facility to support its ongoing operations.

The administrative agent and collateral agent for the facility is Cantor Fitzgerald Securities. Loans will bear interest at 12%, and the facility will mature on Dec. 31, 2025.

The plan provided for the conversion of about $750 million of first-lien note claims to 91.5% of new equity, subject to dilution, and about $326 million of second-lien note claims to 8.5% of new equity, subject to dilution, as well as issuance of new warrants to the holders of second-lien note claims.

Holders of other secured claims will receive payment in full in cash, the collateral securing their claims or reinstatement of their claims.

Holders of other priority claims will receive payment in full in cash.

Holders of general unsecured claims and section 510(b) claims will receive no recovery.

Intercompany claims and intercompany interests will be reinstated, comprised or canceled and released without any distribution.

Legal rights of existing Lux beneficial interests will be deemed transferred to the estate representative or another reorganized debtor.

Greenhill & Co. acted as financial adviser, Latham & Watkins LLP and Jones Walker LLP served as legal counsel and AlixPartners acted as restructuring adviser to the company. Houlihan Lokey acted as financial adviser and Akin Gump Strauss Hauer & Feld LLP acted as legal adviser to an ad hoc group of noteholders.

Pacific Drilling is a Luxembourg-based operator of drillships. The company filed Chapter 11 bankruptcy on Oct. 30 under case number 20-35212.

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