Seadrill emerges from Chapter 11 bankruptcy

Seadrill announced it has emerged from Chapter 11 bankruptcy after satisfying all conditions of its restructuring plan or having conditions of that plan waived.

The plan has equitized approximately $2.4 billion in unsecured bond obligations, more than $1 billion in contingent newbuild obligations, substantial unliquidated guaranty obligations, and approximately $250 million in unsecured interest rate and currency swap claims, while extending near-term debt maturities, providing the company with more than $1 billion in fresh capital and leaving employee, customer and ordinary trade claims largely unimpaired.

The plan has re-profiled the company’s debt and provided substantial liquidity that puts the company in a strong position to execute its business plan. Seadrill’s position now includes:

• Total cash of approximately $2.1 billion;
• Secured bank debt of approximately $5.7 billion with the first maturity in 2022;
• New secured notes of approximately $880 million maturing in 2025;
• Backlog of approximately $2.3 billion for Seadrill, excluding Seamex and Seadrill Partners; and
• Common shares issued of 100 million as described further below.

Issuance, listing and trading of new common stock

The company has received approval to list its new common shares on the New York Stock Exchange (NYSE) under the same NYSE ticker symbol SDRL as the company’s existing common shares.  Subject to the relevant approvals, the company also intends to have its equity listed on the Oslo Stock Exchange.

On the effective date, the company will have approximately 100 million new common shares outstanding.  The new common shares will be allocated as set forth below, in accordance with provisions of the plan and issued on the effective date:

• 14.25% of the new common shares issued to holders of unsecured claims against the company and certain of its Chapter 11 debtor affiliates;
• 23.75% of the new common shares issued to participants in the $200 million equity investment under the plan;
• 54.625% of the new common shares issued to participants in the $880 million new secured notes investment under the plan;
• 1.9% of the new common shares issued to holders of existing common equity interest in the company as of the effective date, an effective exchange ratio of approximately 0.0037345 new common shares per each existing share, and
• 5.475% of the new common shares issued as a structuring fee to certain of the new money investors.

Trading in approximately 16 million new common shares issued to existing shareholders and holders of unsecured claims will commence on the NYSE one day after the effective date, on 3 July 2018, under the ticker symbol SDRL. Additional shares may commence trading in the coming weeks after a resale registration statement on Form F-1 with respect to additional shares issued on the effective date to certain investors is declared effective by the Securities and Exchange Commission. The existing shares will continue to trade on both the NYSE and Oslo Stock Exchanges under the same ticker symbol through the close of trading on the effective date but thereafter such trading will be suspended and the shares will be cancelled in due course.

Because the company will continue to use the ticker symbol SDRL, holders of existing shares, brokers, dealers and agents effecting trades in the existing shares, and persons who expect to receive new common shares or effect trades in new common shares, should take note of the anticipated cancellation of the existing shares and issuance of new common shares, and the two different CUSIP numbers signifying the Existing Shares and the new Common Shares, in trading or taking any other actions in respect of shares that trade under the SDRL ticker.

Fresh start reporting

From the effective date, the company expects to adopt fresh-start reporting. Under fresh-start reporting, the company’s assets and liabilities are re-measured using fair value accounting principles.  Estimates of fair value adopted under fresh-start reporting represent the company’s best current estimates based upon appraisals and valuations.

In accordance with reporting obligations, the company will issue its next earnings report in November 2018, which will include half-year and Q3 2018 results and reflect fresh start reporting.

New board of directors

In accordance with the plan, a newly constituted board of directors of the company has been appointed, consisting of John Fredriksen (chairman), Harald Thorstein, Kjell-Erik Østdahl, Scott D. Vogel, Peter J. Sharpe, Eugene I. Davis, and Birgitte Ringstad Vartdal.

Mr Fredriksen commented, “We are pleased to be emerging from chapter 11 and moving forward with a solid financial foundation on which we will continue to grow and strengthen our business.”

Anton Dibowitz, CEO of Seadrill Management, commented, “I would like to thank our customers, vendors and financial stakeholders for their continued loyalty and support throughout the restructuring process. I would also like to thank all our employees for their continued hard work and dedication during this period and whose efforts were a key part of concluding this restructuring process.”