Seadrill New Finance Limited Launches Chapter 11 Solicitation

Source: www.gulfoilandgas.com 12/8/2021, Location: South America

Seadrill Limited and the Issuer announce, further to previous announcements made by Seadrill and the Issuer including on July 2, 2021, the launch of solicitation of votes in respect of the Issuer’s chapter 11 plan of reorganisation (the “Plan”). Following solicitation, the Issuer and certain of its subsidiaries intend to file pre-packaged chapter 11 cases in the US Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) and seek approval of the Plan.

The key terms of the Plan include:
- the release by the holders of the Issuer’s 12.0% Senior Secured Notes due 2025 (the “Noteholders” and the “Notes”, respectively) of all existing guarantees and security and claims (if any) with respect to Seadrill and its subsidiaries (excluding the Issuer and certain of its subsidiaries);
- the Noteholders receiving 65% of pro forma equity in the Issuer, with Seadrill Investment Holding Company (a subsidiary of Seadrill) retaining the remaining 35% of pro forma equity in the Issuer, which shall effect a separation of the Issuer and its subsidiaries (including the Seabras Sapura assets and the SeaMex group) from the consolidated Seadrill group;
- the Noteholders will have appointment rights in respect of 4 out of 5 of the Issuer’s directors on the board of the restructured Issuer’s group, with the remaining director to be appointed by Seadrill;
- new notes will be issued pro rata to Noteholders on amended terms including:
- maturity date: July 15, 2026
- interest: either (a) 9.0%, consisting of (i) 3.00% cash interest plus (ii) 6.00% PIK interest, or (b) 10.0% PIK, in each case payable quarterly call protection: redemption price on or after:
July 15, 2021: 105%
July 15, 2022: 102%
July 15, 2023 and thereafter: 100%

- the Noteholders will have a first priority right to fund any additional liquidity needs of the Issuer or its affiliates; and
- Seadrill will continue to provide certain management services to the Issuer’s group (with resolution and commercial agreement on payment of go-forward management fees).

The key commercial terms of the Plan have support from approximately 81.8 of the Noteholders, pursuant to a restructuring support agreement dated July 2, 2021. As such, and given the pre-packaged nature of the chapter 11 cases, the Issuer expects to emerge from chapter 11 shortly after filing. The Issuer and its subsidiaries intend to operate in the normal course of business during the expedited chapter 11 process.

Following consummation of the Plan, which remains subject to the approval of the Bankruptcy Court, the amended debt terms will provide additional financial flexibility and stability to the Issuer. Benefitting from both the new ownership structure and the continuity provided by the Seadrill group, the Issuer will continue to focus on maximising value for all stakeholders from its portfolio of investments including the Seabras Sapura JV and the SeaMex group.

The voting deadline, and the deadline for submission of the registration form (to enable Noteholders to receive their pro-rata distribution of equity in the Issuer on or shortly after the effective date of the Plan), is 7 January 2022 at 4.00pm (Prevailing Central Time).

Kirkland & Ellis LLP and Slaughter and May are serving as legal advisors to the Issuer in connection with the restructuring. Akin Gump Strauss Hauer & Feld are serving as legal advisors to an ad hoc group of the Noteholders (the “Ad Hoc Group”), and Ducera Partners LLC are serving as the Ad Hoc Group’s financial adviser.

This announcement relates to Seadrill New Finance Limited and is not expected to impact the recoveries existing shareholders of Seadrill Limited will receive under the Seadrill Limited Plan. Consummation of the Seadrill Limited Plan is subject to a number of customary terms and conditions, including court approval, which was obtained on October 26, 2021.





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