Pacific Drilling now has Quantum Pacific support for creditors’ plan

By Caroline Salls

Pittsburgh, Aug. 20 – Pacific Drilling SA said a plan of reorganization filed on July 31, which is based on a proposal presented to the company’s board of directors by an informal group of its secured creditors, now has the full support of majority shareholder Quantum Pacific (Gibraltar) Ltd. (QP).

According to a news release, the plan was already supported by all of Pacific Drilling’s major creditor interests. With QP’s participation, the company said it expects a smooth plan confirmation process and a quick emergence from its Chapter 11 proceedings.

“[An agreement] reached by QP and the ad hoc group delivers the final piece needed to make the company’s plan a consensual one that has the support of the company’s major stakeholders,” Pacific Drilling chief executive officer Paul Reese said in the release.

Under the plan, the company said it expects to raise $1.5 billion of new capital comprised of $1 billion in a combination of first-lien and second-lien secured notes and $500 million of equity through a rights offering and a private placement.

Existing holders of Pacific Drilling common shares would receive no recovery under the plan.

As part of the agreement reached in mediation, the company said QP and its investment partners will commit to purchase $100 million of the first-lien secured notes and $100 million of the second-lien secured notes to be issued under the third-party syndicated financing contemplated by the plan.

QP and its investment partners will also commit to purchase $50 million of the new equity through a private placement.

“With significant new capital commitments from both groups and the support from all stakeholders, Pacific Drilling is now on track to exit Chapter 11 with one of the strongest balance sheets in the industry and ample liquidity to see it through the long-expected recovery of the offshore drilling industry,” chairman of the board Cyril Ducau said in the release.

Upon effectiveness of the plan, Pacific Drilling said its cash position will be significantly enhanced, and the company will be in a much stronger financial position to take advantage of its dedicated, high-specification deepwater drillship fleet in anticipation of an improving market for offshore drilling services.

Additionally, the company said it expects to pay all unsecured trade claims in full.

Plan effectiveness is subject to execution and delivery of definitive agreements, approval from the U.S. Bankruptcy Court for the Southern District of New York, completion of the financing transactions and other customary conditions.

The company was advised through this process by AlixPartners LLP as financial adviser, Evercore as investment bankers and Togut, Segal & Segal LLP as bankruptcy counsel.

Pacific Drilling is a Luxembourg-based operator of drillships. The company filed for bankruptcy on Nov. 12, 2017 under Chapter 11 case number 17-13193.

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