Seadrill files amended plan, requests 180-day exclusivity extension

By Caroline Salls

Pittsburgh, Dec. 18 – Seadrill Ltd. filed a revised plan of reorganization and related disclosure statement with the U.S. Bankruptcy Court for the Southern District of Texas.

As previously reported, the restructuring includes the Sevan and North Atlantic Drilling units.

Seadrill entered into a restructuring support agreement with its bank lenders, bondholders and a consortium of investors.

That agreement delivers $1.06 billion of new capital in Seadrill comprised of $860 million of secured notes and $200 million of equity.

The Seadrill group’s lending banks agreed to defer maturities of all secured credit facilities, totaling $5.7 billion, by five years with no amortization payments until 2020 and significant covenant relief.

Additionally, assuming unsecured creditors support the plan, the group’s $2.3 billion of unsecured bonds and other unsecured claims will be converted into about 15% of the post-restructured equity with participation rights in both the new secured notes and equity.

If these creditors do not support the plan, they will receive a liquidation recovery.

Holders of Sevan and North Atlantic Drilling debtors’ common stock will receive no recovery.

Holders of Seadrill common stock will receive about 2% of the post-restructured equity.

According to a company news release, the revised disclosure statement includes a valuation and liquidation analyses prepared by the company and its advisers.

Plan changes

The company said in the amended disclosure statement that the lender support for the plan has increased to 99% from 97%, and capital commitment parties now include holders of 40% of unsecured bonds, up from 30%.

In addition to equitizing $2.3 billion in unsecured bond obligations, Seadrill said the amended plan now also includes equitization of $250 million in unsecured interest rate and currency swap claims, as well as other non-assumed lease and contract claims.

Seadrill said in the amended disclosure statement that it is in the midst of a marketing process, and it is in settlement discussions with some parties in interest.

The company said Barclays and an informal debtholder group have both submitted proposals that call for their participation in the restructuring transaction.

To the extent it elects to implement either proposal or implement a settlement with the official committee of unsecured creditors or other unsecured creditor constituency, Seadrill said it is possible that the treatment for holders of general unsecured claims will change. Any change is expected to be neutral or beneficial to holders of those claims.

Exclusivity extension sought

Seadrill has also requested a 180-day extension of its exclusive periods for filing and soliciting votes on a Chapter 11 plan, according to a motion filed Friday.

Specifically, the company asked the court to extend its exclusive filing period through May 10 and the solicitation period through July 9.

“The debtors believe it is prudent to seek an extension of the exclusivity periods to preserve their exclusive right to both prosecute the plan currently on file and file and solicit a new plan of reorganization should unforeseen issues arise with respect to confirmation,” the motion said.

Hearings on approval of the disclosure statement and exclusivity extension motion are scheduled for Jan. 10.

Financial forecast revised

The company said in an updated business plan released Monday that over the period of 2017 to 2022, revenue is expected to be $1,407,000,000 lower than forecast in September.

In addition, Seadrill said it now expects cash flow to be lower by $604 million compared to the September forecast.

EBITDA for 2017 to 2022 is expected to total $6,687,000,000.

Hamilton, Bermuda-based Seadrill owns and operates offshore drilling rigs. The company filed bankruptcy on Sept. 12 under Chapter 11 case number 17-60079.

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