Seadrill Limited — Form 6-K Summary
Business Context and Reporting Period
Filed February 23, 2022, for February 2022. On February 22, 2022, Seadrill 2021 Limited, renamed Seadrill Limited, became the successor registrant to Old Seadrill following emergence from Chapter 11. Seadrill is an offshore drilling contractor operating approximately 35 rigs, including drillships, jack-ups, and semi-submersibles.
Financial Position and Key Metrics
| Metric | As of February 22, 2022 |
|---|---|
| Total cash, including restricted cash | $486 million, including $151 million of restricted cash |
| First-lien new-money debt | $300 million, comprising a $175 million term loan and an undrawn $125 million revolving credit facility |
| Second-lien takeback debt | $683 million |
| Unsecured convertible bonds | $50 million |
| Common shares outstanding | Approximately 50 million |
The filing does not provide clear revenue, profit, operating cash flow, margin, or liquidity-ratio figures. The company raised $350 million in new financing under its reorganization plan.
Material Changes Versus the Prior Comparable Period
- Approximately $4.9 billion of secured bank debt was equitized, materially delevering the balance sheet.
- The capital structure was consolidated into a single collateral silo.
- Existing shareholders of the predecessor company were reduced to 0.25% of their prior holdings.
- Approximately 50 million new common shares were issued: 83.00% to holders of credit agreement claims, 16.75% to rights offering participants and backstop parties, and 0.25% to holders of predecessor shares.
- A new board of directors was appointed in accordance with the reorganization plan.
Guidance, Outlook, Risks, and Unusual Items
Management stated that improved liquidity and lower leverage would support disciplined capital investment, cost containment, contract risk management, and pursuit of opportunities in the offshore drilling industry. Management also characterized the market recovery as well underway, but the filing provides no quantified financial guidance.
The company adopted fresh-start reporting on the Effective Date. Assets and liabilities will be remeasured using fair value principles, and the resulting accounting changes are expected to appear in the quarter ended March 31, 2022. The December 31, 2021 earnings report covers the pre-emergence period and does not reflect fresh-start reporting.
Subject to approvals, the company expected the new shares to begin trading on Euronext Expand in the second quarter of 2022, followed by potential uplisting to the Oslo Stock Exchange main market and the New York Stock Exchange. Existing shares were expected to be cancelled, and Regulation S shares carry resale restrictions in the United States.
Forward-looking statements are subject to risks and uncertainties relating to offshore drilling markets, business performance, restructuring execution, capital investment, costs, contracts, and other factors disclosed in the company’s SEC filings. The filing provides no assurance that planned listings, market recovery, or strategic objectives will occur as expected.
Important Facts for Investors to Verify
- Completion and terms of the fresh-start accounting adjustments in the March 31, 2022 financial statements.
- Actual unrestricted cash and availability under the revolving credit facility, given that $151 million of cash was restricted and the $125 million revolver was undrawn.
- Final debt terms, maturities, interest rates, covenants, and collateral arrangements for the first-lien, second-lien, and convertible debt.
- Cancellation of predecessor shares and issuance, listing, and trading status of the new common shares, including applicable CUSIP, ISIN, and Regulation S restrictions.
- Subsequent revenue, profitability, cash flow, fleet utilization, backlog, contract coverage, and offshore drilling market conditions.