Tuesday, January 31, 2017

Seadrill will obtain at least one billion dollars in new capital – E24

It has in quite exactly a year been known that the rig company Seadrill jobs with a larger restructuring, and on Tuesday, the company has sent out a message that is presented more detail of the work around this.

the Background is that conditions are difficult in the rig market, and that the company has large gjeldsforfall the coming years.

“the key objectives guiding the company’s restructuring is still to build a bridge towards improvement and to achieve a sustainable capital structure,” writes the company in an announcement.

As expected, the company has been in dialogue with their creditors, and these have been referred to the following package:

  • the Company wants to extend the maturity of its bank loans from 2021 to 2023, reduce the fixed installments and adjust the loan conditions
  • Seadrill also wish to extend the maturity of unsecured claims, so that these expire in the period from 2025 to 2028
  • And last, but not least, want Seadrill to fetch at least one billion dollars in new capital, equivalent to around nok 8.3 billion
Hard work

at the same time admits Seadrill ceo Per Wullf that work to get in place, the solution has been surprisingly demanding.

the Negotiations have proven to be more complex than we originally had expected. But no matter have key interested parties shown a clear willingness to be part of a solution, and with the right structure and the right conditions, we believe that there is significant capital available for us, ” says Wullf in a comment.

In connection with the current message, it has also been released a presentation of obligasjonseiernes suggestions for Seadrill – one could call it a kind of “motbud” to the company’s own proposal.

Here it is stated that the bondholders want to work with the company and the market risks in order to find a solution.

They agree that it needed additional capital and liquidity, as well as a reduction in the company’s debt burdens, and outlines among other things the following points:

  • It is proposed a guaranteed issuance of new secured debt securities for 700 million dollars. This shall be subordinate to the existing secured credit facility
  • Substitution of unsecured bonds for convertible, secured bonds and equity to the stated terms and conditions
  • Extension of the maturity on the credit facilities, available credit and reduce the avdragsbetalinger on these, as well as to adjustments of terms and conditions
  • A item where cash flow will be used to pay off debt
  • A cleanup in Seadrill system, among other things, related to the obligations between the companies

Seadrill is a great company with brilliant people, assets and customers, and we look forward to conclude a transaction that ensures that Seadrill is still well positioned for an upcoming improvement in the industry.

So far, the company has had contact with the secured creditors who are first in the queue (read banks, journ.anm.). This contact has taken place over the past year.

Through the second half of last year, it was so established dialogue with potential new investors, which include Fredriksen-family market risks the Holding.

In December, saw a group of bondholders brought on the path.

“the Discussions with the banks, potential new pengeinvestorer, the group, with bondholders and the market risks Holdings continues”, writes Seadrill on Tuesday.

Warns against the dilution and loss

the Company is aiming for a voluntary agreement within the decay of a loan associated with the West Eminence the 30. april 2017. Given that this falls in place, can the implementation be done within the second quarter of 2017.

Seadrill also account for the fact that it is not being able to land any agreement, and has “nødplaner” in bakhånd. It is namely clear that a restruktureringsløsning not be as comfortable for everyone.

“We expect that a comprehensive agreement will be based on to obtain significant new capital is likely to result in significant dilution of existing stakeholders and potentially cause the loss of other financial stakeholders.”

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