Seadrill Gets Acceptance of Bankruptcy Exit Plan

Seadrill has obtained approval for its plan which includes the reorganization of its fleet of platforms (Seadrill)

Posted on Oct 11, 2021, 12:48 PM by

The maritime executive

Seadrill has cleared another major hurdle in its efforts to come out of its second bankruptcy proceeding in the past four years. The company announced the preliminary results of the vote of its creditors and shareholders, saying it had obtained massive acceptance of the reorganization plan. It came just days after the company told the court it might need more time to get buy-in from all parties involved.

The deadline for creditors to submit votes on the plan was October 7. Seadrill now reports that all voting categories of stakeholders have agreed to the plan, including the 12 credit facilities and general unsecured creditors and shareholders. Over 96 percent of secured lenders voted and over 88 percent of secured lenders accepted the plan. The final results of the vote have yet to be certified by the voting officer, who is due to report to the United States Bankruptcy Court for the Southern District of Texas by October 22.

Earlier last week, Seadrill’s attorneys filed a bankruptcy court complaint saying he was still trying to get as much support as possible for his proposed reorganization plan. The file says 58% of senior lenders support the restructuring plan and the company has requested up to four additional months to continue managing the reorganization process.

Grant Creed, CFO, commented today: “The almost unanimous acceptance of the plan by our lenders is another important step towards the emergence of Chapter 11 Seadrill. It has been a long journey in providing broad support to all of our creditors, but I am confident that our long-term emergence will put us back at the heart of a collectively undergoing major readjustment and will strengthen our position as market leader.

Based on the expected results of the vote, Seadrill is set to have its reorganization plan confirmed in a court hearing scheduled for October 26. If the plan is upheld by the court, Seadrill aims to exit Chapter 11 proceedings approximately 60 days later, subject to certain customary conditions, including certain antitrust approvals.

The plan’s goal is to reduce the company’s $ 6.1 billion debt by about $ 4.9 billion and provide $ 350 million in new financing. Seadrill will be controlled by its major lenders, with the current shareholder position falling to about a quarter of one percent of the company’s equity. Renowned investor John Fredriksen is largely relinquishing his position in the company with only a small portion of the new equity and a stake in a small unsecured debt that would be converted into shares.

As part of the reorganization plan, Seadrill offered to recycle 10 of its vessels from its 42-rig fleet. So far, two platforms have been sold and five are in the process of being recycled. The fleet includes 7 drilling ships, 15 jack-up platforms and 12 semi-submersibles.

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