Indebted offshore driller Seadrill Limited has made changes to its credit facilities to insulate Seadrill Partners, a limited liability company formed by Seadrill Limited to own drilling rigs, from its restructuring.
Seadrill Limited informed on Thursday it has completed amendments to three secured credit facilities that relate to rigs bought by Seadrill Partners from the company that will insulate Seadrill Partners from events of default related to the company’s likely use of chapter 11 proceedings to implement its restructuring plan.
According to the driller, these amendments to the three facilities remove Seadrill Partners and its consolidated entities as a borrower or guarantor and separate the facilities such that each resulting Seadrill Limited facility is secured only by Seadrill Limited’s assets without recourse to Seadrill Partners or its assets.
This transaction is part of the company’s comprehensive restructuring plan that is intended to preserve the value of its equity stakes in Seadrill Partners and its consolidated entities.
The company added that discussions continue with certain third party and related party investors and its secured lenders on the terms of a comprehensive recapitalization.
“As previously disclosed, we continue to believe that implementation of a comprehensive restructuring plan will likely involve chapter 11 proceedings, and we are preparing accordingly. It is likely that the comprehensive restructuring plan will require a substantial impairment or conversion of our bonds, as well as impairment and losses for other stakeholders, including shipyards. As a result, the company currently expects that shareholders are likely to receive minimal recovery for their existing shares,” Seadrill Limited said.
The company’s business operations remain unaffected by these restructuring efforts and the company expects to continue to meet its ongoing customer and business counterparty obligations.
Earlier this week, Seadrill amended the term credit facility provided to its subsidiary Seadrill Eminence Ltd. to mature on September 14, 2017, aligning it with that of the company’s $400 million credit facility and the revolving credit facility provided to North Atlantic Drilling Ltd., a majority owned subsidiary of the company, thereby providing an additional period for negotiations to continue with the company’s bank group and other stakeholders over a comprehensive restructuring plan.
Back in July, the cash-strapped driller was given some breathing space in an effort to restructure its reported $14 billion debt through reaching an agreement with its bank group to extend the comprehensive restructuring plan negotiating period until September 12, 2017.