Seadrill Partners obtains approval of $15 million guarantee facility

By Sarah Lizee

Olympia, Wash., March 25 – Seadrill Partners LLC received court approval to enter into a new $15 million guarantee facility with DNB Bank ASA, according to an order filed Thursday with the U.S. Bankruptcy Court for the Southern District of Texas.

Before the petition date, the debtors relied on a $15 million, fully cash-collateralized guarantee facility provided by Danske Bank, Norwegian Branch to provide necessary credit support under various customer contracts and to satisfy various regulatory requirements in jurisdictions where the debtors operate.

The debtors no longer have access to new guarantees under the Danske guarantee facility and as such require a replacement facility to secure performance under various contracts and satisfy local operating requirements.

The debtors said they have an immediate need for new guarantees in connection with their contract for the West Capella fleet vessel, which the debtors anticipated executing on Thursday.

“Without the guarantees to be issued under the DNB guarantee facility agreement, the debtors risk losing the West Capella contract and the approximately $32 million in revenue expected to be generated over the course of the contract,” the company said in its motion.

The company said access to performance guarantees as contemplated in the guarantee facility agreement would provide the debtors with a number of benefits, including more flexibility and leverage in contractual negotiations, a decrease in credit risk exposure with respect to cash deposits with counterparties, and more overall operational stability.

“Due to the correlation between these benefits and the achievement of the debtors’ long-term business and operational goals, the benefits of the DNB guarantee facility agreement would ultimately inure to the creditors of the debtors’ estates,” the company said.

London-based Seadrill Partners owns, operates and acquires offshore drilling rigs and filed Chapter 11 bankruptcy on Dec. 1. The company was formed by Seadrill Ltd., which filed Chapter 11 bankruptcy on Sept. 12, 2017 and emerged on July 2, 2018.

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