Seadrill Limited — Form 6-K Summary
Filing date: July 27, 2023. Reporting period: July 2023. This filing reports a debt refinancing and related collateral arrangements; it does not provide quarterly or annual operating results.
Business Context and Transaction
Seadrill is an offshore drilling contractor operating a technologically advanced fleet across shallow-water, deepwater and ultra-deepwater markets. Its wholly owned subsidiary, Seadrill Finance Limited, issued $500 million aggregate principal amount of 8.375% senior secured second-lien notes due 2030 in a Rule 144A and Regulation S offering.
Net proceeds were used to prepay the Company’s existing secured debt facilities in full and pay related exit fees. Remaining proceeds, together with proceeds from the incremental notes described below, are intended for general corporate purposes.
Key Financial and Capital Structure Matters
| Item | Details |
|---|---|
| Initial notes issued | $500 million principal amount |
| Interest rate | 8.375% per year, payable semi-annually on February 1 and August 1, beginning February 1, 2024 |
| Maturity | August 1, 2030 |
| Incremental notes | $75 million additional principal amount, priced at 100.75% of par; scheduled to close August 8, 2023 |
| New revolving credit facility | Up to $225 million, with an accordion feature of up to $100 million; available upon closing of the initial notes offering, subject to customary conditions |
| Collateral | Second-priority liens on collateral supporting the new revolving facility, including collateral rigs, specified subsidiary equity, proceeds and certain other pledged property |
| Guarantees | Fully and unconditionally guaranteed, jointly and severally, by specified subsidiaries and potentially by future borrowers or guarantors meeting the stated conditions |
The filing does not provide revenue, profit, cash flow, margin, cash balance, total debt, leverage or liquidity metrics for the reporting period.
Material Changes Versus the Prior Comparable Period
- Seadrill replaced its existing secured debt facilities through the $500 million notes offering and related repayment of those facilities.
- The Company established a new senior secured five-year revolving credit facility with committed capacity of up to $225 million, plus a potential $100 million accordion.
- The Company announced an additional $75 million notes issuance that is expected to become fungible with the initial notes after the exchange date, on or before September 7, 2023.
- The new notes and revolving facility introduced a first-lien/junior-lien collateral priority structure governed by a collateral trust agreement.
Terms, Outlook, Risks and Unusual Items
The issuer may redeem the notes beginning August 1, 2026 at specified premiums, declining from 104.188% in 2026 to par in 2028 and thereafter. Certain earlier redemptions are permitted at make-whole or specified equity-offering and annual redemption prices. A change-of-control triggering event may require repurchase of the notes at 101% of principal plus accrued interest.
The indenture restricts additional debt and liens, restricted payments and investments, asset sales, affiliate transactions, and mergers or dispositions, subject to exceptions and qualifications. Certain covenants may be suspended if the notes achieve investment-grade ratings from at least two agencies and no default is continuing.
Forward-looking matters include the closing and exchange of the incremental notes, availability and use of the revolving facility, business prospects and market conditions. Key risks include offshore drilling supply and demand, dayrates, oil-price volatility, financial-market conditions, regulation, rig performance, contract cancellations, competition-authority review, geopolitical uncertainty including the Ukraine conflict, and broader economic or health-related disruptions.
The securities were not registered under the Securities Act and were offered only to qualified institutional buyers under Rule 144A and to non-U.S. persons under Regulation S.
Investor Verification Checklist
- Verify completion of the $75 million incremental notes offering and its exchange into notes fungible with the initial series.
- Confirm the amount and terms of existing secured debt repaid, including any remaining debt or refinancing fees.
- Review actual availability, borrowing conditions and outstanding borrowings under the new revolving credit facility.
- Examine the indenture and collateral trust agreement for covenant restrictions, lien priority, collateral coverage and default provisions.
- Assess Seadrill’s post-refinancing cash, liquidity, leverage, interest burden and future refinancing needs using subsequent filings.
- Monitor offshore drilling market conditions, dayrates, rig utilization and potential contract cancellations.