Offshore drilling contractor Pacific Drilling expects to emerge from Chapter 11 bankruptcy by year-end following the confirmation of its prearranged plan of reorganization by the U.S. court.
Pacific Drilling filed for Chapter 11 bankruptcy to eliminate $1.1 billion of bond debt amid significant disruption in the offshore drilling market caused by the Covid-19 pandemic at the end of October 2020.
The impact of these market conditions on Pacific Drilling’s business has been direct and significantly negative, rendering its capital structure unsustainable over the long-term.
Only days after the Chapter 11 filing, the trading of Pacific Drilling common shares on the New York Stock Exchange (NYSE) was suspended and the drilling contractor was delisted .
The company’s common shares started trading in the over-the-counter (OTC) market on the Pink Open Market on 3 November.
In an update on Tuesday, the rig owner said that the U.S. Bankruptcy Court for the Southern District of Texas had confirmed the First Amended Joint Plan of Reorganization of Pacific Drilling and its debtor-affiliates pursuant to Chapter 11 of the Bankruptcy Code on 21 December 2020.
Bernie G. Wolford , Chief Executive Officer, said: “The Court’s confirmation of our Plan represents an important milestone in our progress towards emergence by year-end with a fully de-levered balance sheet and the capacity to deliver world-class drilling services with our fleet of 6th and 7th generation drillships”.
In accordance with the confirmed plan, Pacific Drilling will de-lever its balance sheet by eliminating over $1 billion of funded debt obligations and have access to additional liquidity to operate going forward with approximately $100 million in cash on hand at emergence and an undrawn $80 million senior secured delayed draw term loan exit facility.
It is worth reminding that Pacific Drilling had also gone through financial restructuring back in late 2017.
The company filed for Chapter 11 bankruptcy in November 2017 to pursue a comprehensive restructuring of its approximately $3 billion in principal amount of outstanding funded debt.
The drilling contractor emerged from bankruptcy after successfully completing restructuring transactions in November 2018.