Seadrill’s plan effective date deadline extended through Feb. 15

By Sarah Lizee

Olympia, Wash., Jan. 28 – Seadrill Ltd. and the parties under a plan support agreement and a backstop commitment letter agreed to extend the deadline for the company’s Chapter 11 plan of reorganization through Feb. 15, according to a notice filed Friday with the U.S. Bankruptcy Court for the Southern District of Texas.

The plan was confirmed on Oct. 26, as previously reported.

Seadrill entered into a plan support agreement with some of its senior secured lenders holding about 57.8% of its senior secured loans as well as a backstop commitment letter entered into with some of the consenting lenders.

The agreements contemplate a plan of reorganization that will raise $350 million of new financing and reduce the company’s liabilities by over $4.9 billion.

Some of the consenting lenders have also agreed to backstop a $300 million first-lien exit facility. The lenders participating in and backstopping the new-money facility will collectively receive 16.75% of new equity in the newly constituted Seadrill, subject to dilution.

Under the plan, the senior secured lenders will also exchange $5.6 billion of existing debt for $750 million of second-lien takeback debt and 83% of the new equity, subject to dilution.

Hemen Holding Ltd., currently the company’s largest shareholder, has also committed to fund a $50 million new-money unsecured bond to be issued under the plan, which is convertible into 5% of the new equity under specified circumstances.

Creditor treatment

Under the plan, holders of other secured claims will receive payment in full in cash, the collateral securing their claims, reinstatement of their claims, or other treatment leaving their claims unimpaired.

Holders of other priority claims will receive payment in full in cash, reinstatement of their claims, or other treatment leaving their claims unimpaired.

Guarantee facility claims will be reinstated.

Holders of AOD credit agreement claims will receive payment in cash in an amount equal to their claims, or, their pro rata share of the subscription rights for $29.4 million of the new first-lien facility, $73.4 million in principal amount of the new second-lien facility, 4.1% of the new Seadrill common shares, subject to dilution by the management incentive plan and the convertible bond equity, if any, and cash equal to the net scrap proceeds attributable to the pre-petition AOD credit agreement, if any.

Holders of the $450 million of eminence credit agreement claims will receive their pro rata share of the subscription rights for $3.3 million of the new first-lien facility, $8.3 million in principal amount of the new second-lien facility, cash equal to the net scrap proceeds attributable to the pre-petition $450 million eminence credit agreement, 1.1% of the new Seadrill common shares, subject to dilution by the management incentive plan and the convertible bond equity, if any, and any AOD gross-up recovery distributed to this class.

Holders of NADL credit agreement claims will receive their pro rata share of the subscription rights for $133.2 million of the new first-lien facility, $333.1 million in principal amount of the new second-lien facility, cash equal to the net scrap proceeds attributable to the pre-petition NADL credit agreement, 11.9% of the new Seadrill common shares, subject to dilution by the management incentive plan and the convertible bond equity, if any, and any AOD gross-up recovery distributed to this class.

Holders of $1.35 billion credit agreement claims will receive their pro rata share of the subscription rights for $4.2 million of the new first-lien facility, $10.5 million in principal amount of the new second-lien facility, cash equal to the net scrap proceeds attributable to the pre-petition $1.35 billion credit agreement, 12.8% of the new Seadrill common shares, subject to dilution by the management incentive plan and the convertible bond equity, if any, and any AOD gross-up recovery distributed to this class.

Holders of $950 million credit agreement claims will receive their pro rata share of the subscription rights for $1.2 million of the new first-lien facility, $3 million in principal amount of the new second-lien facility, cash equal to the net scrap proceeds attributable to the pre-petition $950 million credit agreement, 10.2% of the new Seadrill common shares, subject to dilution by the management incentive plan and the convertible bond equity, if any, and any AOD gross-up recovery distributed to this class.

Holders of ECA credit agreement claims will receive their pro rata share of the subscription rights for $11.3 million of the new first-lien facility, $28.2 million in principal amount of the new second-lien facility, cash equal to the net scrap proceeds attributable to the pre-petition ECA credit agreement, 8.5% of the new Seadrill common shares, subject to dilution by the management incentive plan and the convertible bond equity, if any, and any AOD gross-up recovery distributed to this class.

Holders of $1.5 billion credit agreement claims will receive their pro rata share of the subscription rights for $50.7 million of the new first-lien facility, $126.8 million in principal amount of the new second-lien facility, cash equal to the net scrap proceeds attributable to the pre-petition $1.5 billion credit agreement, 19.9% of the new Seadrill common shares, subject to dilution by the management incentive plan and the convertible bond equity, if any, and any AOD gross-up recovery distributed to this class.

Holders of $1.75 billion credit agreement claims will receive their pro rata share of the subscription rights for $13.7 million of the new first-lien facility, $34.4 million in principal amount of the new second-lien facility, cash equal to the net scrap proceeds attributable to the pre-petition $1.75 billion credit agreement, 3.7% of the new Seadrill common shares, subject to dilution by the management incentive plan and the convertible bond equity, if any, and any AOD gross-up recovery distributed to this class.

Holders of $450 million Nordea credit agreement claims will receive their pro rata share of cash equal to the net scrap proceeds attributable to the pre-petition $450 million Nordea credit agreement, 0.4% of the new Seadrill common shares, subject to dilution by the management incentive plan and the convertible bond equity, if any, and any AOD gross-up recovery distributed to this class.

Holders of $300 million credit agreement claims will receive their pro rata share of the subscription rights for $35.3 million of the new first-lien facility, $88.3 million in principal amount of the new second-lien facility, cash equal to the net scrap proceeds attributable to the pre-petition $300 million credit agreement, 3.6% of the new Seadrill common shares, subject to dilution by the management incentive plan and the convertible bond equity, if any, and any AOD gross-up recovery distributed to this class.

Holders of $440 million credit agreement claims will receive their pro rata share of the subscription rights for $13.1 million of the new first-lien facility, $32.8 million in principal amount of the new second-lien facility, cash equal to the net scrap proceeds attributable to the pre-petition $440 million credit agreement, 2.4% of the new Seadrill common shares, subject to dilution by the management incentive plan and the convertible bond equity, if any, and any AOD gross-up recovery distributed to this class.

Holders of $400 million credit agreement claims will receive their pro rata share of the subscription rights for $4.5 million of the new first-lien facility, $11.2 million in principal amount of the new second-lien facility, cash equal to the net scrap proceeds attributable to the pre-petition $400 million credit agreement, 4.3% of the new Seadrill common shares, subject to dilution by the management incentive plan and the convertible bond equity, if any, and any AOD gross-up recovery distributed to this class.

Holders of specific trade claims will receive payment in cash in an amount equal to their claims, reinstatement of their claims, or other treatment leaving their claims unimpaired.

Holders of general unsecured claims will receive their pro rata share of $250,000 in cash, provided that holders of credit agreement claims will be deemed to have waived their recovery on account of their general unsecured claims.

Intercompany claims will be reinstated, converted to equity, or otherwise set off, settled, distributed, contributed, canceled or released.

Intercompany interests will be reinstated or set off, settled, addressed, distributed, contributed, merged, canceled or released.

If classes 4 and 5 vote to accept the plan, holders of interests will receive their pro rata share of 0.25% of the new Seadrill common shares, subject to dilution by the management incentive plan and the convertible bond equity, if any. Otherwise, all interests will be extinguished and holders will receive no recovery.

Section 510(b) claims will be discharged with no distribution.

Administrative claims, professional fee claims and priority tax claims will be paid in full.

London-based offshore drilling company Seadrill filed Chapter 11 bankruptcy on Feb. 7, 2021 under case number 21-30427.

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