Business Context and Reporting Period
Seadrill Limited filed this Form 6-K on February 11, 2021, reporting an agreement involving Seadrill New Finance Limited, a Bermuda subsidiary and issuer of 12.0% senior secured notes due 2025.
Material Financial and Capital Structure Developments
- The issuer did not make the semi-annual 4% cash interest payment due January 15, 2021 on the senior secured notes.
- Seadrill and certain consolidated subsidiaries, excluding the issuer and its subsidiaries, filed Chapter 11 cases in the Southern District of Texas.
- The filing does not provide updated revenue, profit, cash flow, margin, debt-balance, or liquidity figures.
Forbearance Agreement and Restructuring
Certain noteholders entered into a forbearance agreement under which they agreed not to exercise specified enforcement rights against the issuer and relevant note obligors in connection with certain potential events of default. The forbearance applies through the earlier of February 24, 2021, or termination of the agreement.
The stated purpose is to provide time for Seadrill, the issuer, and stakeholders to negotiate a restructuring of the notes alongside the Chapter 11 proceedings. The restructuring may involve a court-supervised process. The filing does not specify final restructuring terms, recovery expectations, or whether the negotiations will succeed.
Risks, Contingencies, and Outlook
- Failure to make the interest payment and the Chapter 11 filings may constitute or contribute to events of default under the notes.
- The forbearance is temporary and may terminate before February 24, 2021.
- Noteholders may regain enforcement rights after expiration or termination, subject to applicable proceedings and agreements.
- Management’s restructuring-related statements are forward-looking and subject to substantial risks and uncertainties, including the outcome of negotiations, court proceedings, market conditions, and other factors described in Seadrill’s regulatory filings.
Key Facts for Investors to Verify
- Whether the forbearance agreement was extended, terminated, or replaced after February 24, 2021.
- The ultimate treatment and recovery of the 12.0% senior secured notes due 2025.
- The scope and status of Seadrill’s Chapter 11 proceedings and any related court-supervised restructuring.
- Seadrill’s available liquidity, debt balances, unpaid interest, and any additional defaults or enforcement actions, which are not quantified in this filing.