SEADRILL Ltd current report, Q3 FY2021

Full document

Seadrill Limited — Form 6-K Summary

Business context and reporting period

Seadrill Limited filed this Form 6-K for August 2021. The filing reports an update on the restructuring of SeaMex Ltd., a 50/50 joint venture involving Seadrill New Finance Limited and Seadrill JU Newco Bermuda Ltd.

Key financial and operating information

  • SeaMex’s senior secured bank debt is being refinanced through approximately $219 million of new senior secured notes, including the upfront fee.
  • The New SeaMex Notes have a three-year tenor, call protection, and a 12% “PIYC” rate payable quarterly.
  • The notes will be secured on a senior basis by substantially all assets of the SeaMex group.
  • The notes include an additional uncommitted shelf facility of up to $120 million.
  • No revenue, profit, cash flow, margin, consolidated debt, or liquidity figures are provided in this filing.

Material changes and restructuring steps

  • Seadrill and the Issuer entered into a restructuring implementation deed with, among others, the joint provisional liquidators of SeaMex.
  • Substantially all SeaMex assets are expected to be sold out of provisional liquidation to a newly incorporated, wholly owned Issuer subsidiary, NewCo.
  • NewCo is expected to assume substantially all SeaMex liabilities and replace SeaMex as guarantor of the New SeaMex Notes.
  • A substantial portion of debt owed by SeaMex to Seadrill SeaMex SC Holdco Limited is expected to be released, with a material amount remaining outstanding.
  • Certain SeaMex debt owed to SC Holdco is being accelerated as part of the restructuring implementation.

Outlook, contingencies, and risks

  • Completion of the asset sale remains subject to customary conditions, including applicable antitrust approvals.
  • Under Seadrill’s reorganization plan, existing shareholders are expected to receive 0.25% of the new equity, subject to dilution, only if creditor classes 4 and 6 accept the plan; otherwise, shareholders are not expected to receive a recovery.
  • Implementation of the reorganization plan remains subject to customary conditions, including court approval.
  • The filing cautions that restructuring and other forward-looking statements are subject to substantial risks, uncertainties, assumptions, and potential changes in market and business conditions.

Important facts for investors to verify

  1. Execution and completion of the SeaMex share purchase agreement.
  2. Receipt of required antitrust and other regulatory approvals.
  3. Final principal amount, terms, and issuance status of the New SeaMex Notes.
  4. Actual amount of SeaMex debt released versus remaining payable to SC Holdco.
  5. Creditor voting, court approval, and consummation of Seadrill’s reorganization plan.
  6. Final recovery and dilution applicable to existing Seadrill shareholders.