Seadrill Limited — Form 6-K Summary
Reporting date: July 13, 2023. The filing reports the pricing of a senior secured notes offering and related refinancing actions. Seadrill is an offshore drilling contractor operating a technologically advanced fleet across shallow- to ultra-deepwater markets.
Financing and Key Metrics
- Notes issued: $500 million aggregate principal amount of 8.375% senior secured second-lien notes due August 1, 2030, issued at par.
- The offering was increased from the originally planned $450 million.
- Use of proceeds: Prepayment in full of existing secured debt facilities, payment of related exit fees, and remaining funds for general corporate purposes.
- Revolving credit facility: A new senior secured five-year facility provides commitments of up to $225 million, with an accordion feature of up to $100 million. Its maturity may be reduced to four years subject to certain financial tests.
- The new facility will be guaranteed by the Company and specified subsidiaries and secured by a first lien on the same assets securing the notes.
- The filing does not provide revenue, earnings, cash flow, margin, leverage, liquidity-balance, or other operating performance figures.
Material Changes and Transaction Status
- The notes offering was priced on July 13, 2023 and was expected to close on July 27, 2023, subject to customary conditions and effectiveness of the new credit agreement.
- Availability of borrowings under the new credit facility is conditional on, among other matters, completion of the notes offering and redemption or discharge of the existing super senior term and revolving facilities and senior secured credit facility.
- Borrowings under the new facility also require that Available Cash, after giving effect to borrowings and use of proceeds, does not exceed $250 million.
Outlook, Risks, and Unusual Items
Management did not provide quantitative operating guidance in this filing. Completion of the refinancing and access to the new revolver remain subject to specified closing conditions. Forward-looking statements are subject to risks including offshore drilling supply and demand, day rates, oil-price volatility, financial-market conditions, regulatory changes, rig performance, cancellation of drilling contracts and backlog, geopolitical and macroeconomic conditions, and the conflict in Ukraine.
The securities were offered under Rule 144A and Regulation S and were not registered under the Securities Act or applicable state or foreign securities laws. This filing constitutes neither an offer to sell nor a solicitation to buy in jurisdictions where such activity would be unlawful.
Investor Verification Items
- Verify that the notes offering closed on the expected July 27, 2023 date and confirm final net proceeds.
- Confirm the amount and terms of existing secured debt repaid or discharged.
- Review the final new credit agreement, including maturity, financial tests, borrowing conditions, collateral, guarantees, and accordion availability.
- Assess Seadrill’s post-refinancing interest burden, leverage, liquidity, and cash restrictions using subsequent filings.
- Review subsequent disclosures for changes in drilling day rates, fleet utilization, contract backlog, contract cancellations, and rig performance.