Pacific Drilling S.A. is commencing solicitation of votes on its proposed prearranged chapter 11 plan of reorganization. On November 10 , the United States Bankruptcy Court for the Southern District of Texas—Houston Division (the “Bankruptcy Court”) entered an order, among other things, (i) conditionally approving the Disclosure Statement for the First Amended Joint Plan of Reorganization of Pacific Drilling S.A. and its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (the “Disclosure Statement”) and (ii) scheduling a combined hearing on December 21, 2020 to consider (a) final approval of the Disclosure Statement and (b) confirmation of the First Amended Joint Plan of Reorganization of Pacific Drilling S.A. and its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (the “Plan”). The voting deadline is December 14, 2020 at 5:00 p.m. (prevailing Central Time).
The Plan is subject to Bankruptcy Court approval and, thus, final terms of any restructuring transaction may differ. If approved, the Plan provides for the following:
- Conversion of approximately $750 million of the Company’s outstanding 8.375% First Lien Notes due 2023 to 91.5% of the equity in the reorganized Company, subject to dilution;
- Conversion of approximately $326 million of the Company’s outstanding 11.000% / 12.000% Second Lien PIK Notes due 2024 in exchange for 8.5% of the equity in the reorganized Company, subject to dilution, and new warrants for equity in the reorganized Company;
- Access to new capital in the form of a new senior secured delayed draw term loan credit facility in the aggregate principal amount of up to $80 million ; and
- Elimination of the Company’s entire prepetition cash interest burden to enable the Company to obtain positive free cash flow as the market for high-specification drillships improves.
This description of the Plan is qualified in its entirety by the terms of the Plan, which can be found at http://cases.primeclerk.com/PacificDrilling2020 . The Bankruptcy Court has scheduled a hearing for December 21, 2020 to consider approval of the Disclosure Statement on a final basis and whether to confirm the Plan pursuant to 11 U.S.C. § 1129. If the Plan is confirmed, the Company estimates that the Effective Date of the Plan will be on or before December 31, 2020 .
With approximately $120 million of cash and cash equivalents as of October 30, 2020 , and seven of the most advanced high-specification drillships in the world, Pacific Drilling intends to continue its world-wide operations as usual, deliver services for existing and prospective clients and, subject to court approval, pay all obligations incurred during the Chapter 11 proceedings in full. The Company expects to emerge by year-end with access to new capital in the form of an undrawn $80 million exit facility and with over $100 million of cash and cash equivalents on hand.
