Seadrill Limited Form 6-K Summary
Business context and reporting period
Seadrill Limited filed a Form 6-K for December 2021 reporting the launch of a solicitation of votes on the Chapter 11 plan of reorganization of Seadrill New Finance Limited and certain subsidiaries. The announcement was dated December 8, 2021. The restructuring primarily concerns the Issuer’s portfolio, including the Seabras Sapura joint venture and the SeaMex group.
Key financial and restructuring terms
| Item | Terms disclosed |
|---|---|
| Existing debt | 12.0% Senior Secured Notes due 2025 |
| Ownership after restructuring | Noteholders to receive 65% of pro forma equity; Seadrill Investment Holding Company to retain 35% |
| Board representation | Noteholders to appoint 4 of 5 directors; Seadrill to appoint the remaining director |
| New notes maturity | July 15, 2026 |
| New note interest | Either 9.0%, comprising 3.0% cash interest and 6.0% PIK interest, or 10.0% PIK interest, payable quarterly |
| Call protection | 105% on or after July 15, 2021; 102% on or after July 15, 2022; and 100% on or after July 15, 2023 and thereafter |
| Additional liquidity | Noteholders to have first-priority rights to fund additional liquidity needs of the Issuer or its affiliates |
The filing does not provide revenue, profit, cash flow, margin, total debt balance, or liquidity balances for the reporting period.
Material changes versus the prior comparable period
- The Issuer moved from announcing and preparing the restructuring to formally soliciting votes on its pre-packaged Chapter 11 plan.
- The proposed restructuring would separate the Issuer and its subsidiaries, including the Seabras Sapura and SeaMex businesses, from the consolidated Seadrill group.
- Existing guarantees, security, and claims held by the Noteholders against Seadrill and certain subsidiaries would be released.
- The existing notes would be replaced with new notes having a later maturity and revised cash/PIK interest terms.
Outlook, contingencies, and unusual items
- Approximately 81.8% of Noteholders supported the key commercial terms under a July 2, 2021 restructuring support agreement.
- The Issuer intended to file pre-packaged Chapter 11 cases and expected to emerge shortly after filing, subject to Bankruptcy Court approval.
- The Issuer stated that it intended to operate in the normal course during the expedited Chapter 11 process.
- Voting and registration deadlines were January 7, 2022 at 4:00 p.m. Central Time.
- Seadrill would continue providing management services to the Issuer’s group, with payment terms to be commercially agreed.
- The filing states that the announcement was not expected to affect recoveries available to existing Seadrill Limited shareholders under the separate Seadrill Limited plan. Court approval of that plan had been obtained on October 26, 2021.
- Completion remained subject to Bankruptcy Court approval and other customary conditions. Forward-looking statements were subject to restructuring, market, operational, and other risks, and the Company undertook no obligation to update them.
Investor verification points
- Verify whether the Chapter 11 cases were filed and whether the proposed plan received Bankruptcy Court approval and became effective.
- Confirm the final ownership split, board composition, and treatment of Noteholder claims.
- Verify the final principal amount, terms, and payment performance of the new notes.
- Assess the separation and subsequent performance of the Seabras Sapura and SeaMex assets.
- Review the effect of the restructuring on Seadrill Limited’s consolidated financial statements and existing shareholders’ recoveries.