Seadrill Limited — Form 6-K Summary
Reporting period: Form 6-K for June 2021, filed June 21, 2021. The announcement was issued June 18, 2021 and concerns Seadrill New Finance Limited’s restructuring discussions and the SeaMex Ltd. joint venture.
Business Context
Seadrill is an offshore drilling contractor operating 43 rigs, including drillships, jack-ups and semi-submersibles, across shallow- to ultra-deep-water markets.
Key Financial and Liquidity Information
- The filing does not provide revenue, profit, cash flow, margins or consolidated liquidity figures.
- Seadrill New Finance Limited is in advanced discussions with holders of its 12.0% senior secured notes due 2025 regarding a comprehensive restructuring.
- The existing noteholder forbearance agreement was extended until the earlier of June 25, 2021 or its termination.
- SeaMex has approximately $454 million of subordinated debt owed to Issuer subsidiaries and approximately $190 million of senior secured bank debt.
- SeaMex has approximately $245 million of issued but unpaid invoices owed by Pemex, referred to as Copades.
Material Changes and Restructuring Developments
- The Issuer expects to enter into a restructuring support agreement with certain noteholders in the near term.
- Potential implementation mechanisms include a court-supervised process, including a pre-packaged or pre-arranged Chapter 11 process, or a scheme of arrangement.
- Certain noteholders agreed, following a June 16, 2021 debt trade, to become owners of SeaMex’s approximately $190 million senior secured bank debt.
- Joint provisional liquidators were appointed for SeaMex by the Supreme Court of Bermuda. The appointment was supported by Seadrill, Fintech Holdings Limited and the SeaMex board.
- The proposed SeaMex restructuring may equitize all or a significant portion of the subordinated debt and provide short-term liquidity pending refinancing of the senior bank debt.
Outlook, Risks and Unusual Items
- The joint provisional liquidators intend to conduct accelerated market testing and may pursue a sale of SeaMex subsidiaries to an Issuer subsidiary if consistent with their duties and creditor interests.
- Absent agreement with Fintech, Fintech may cease to hold an equity interest in the go-forward SeaMex group.
- The filing states that the SeaMex provisional liquidation is at the holding-company level and is not expected to affect operational activities, employees, customers or suppliers.
- Seadrill is seeking noteholder consent to access funds in the Issuer’s mandatory offer holding account to maintain SeaMex funding.
- Seadrill is engaging Pemex regarding recovery of unpaid invoices and potential amendments to SeaMex’s contracts.
- Restructuring outcomes, court processes, liquidity access, SeaMex refinancing, Pemex collections and the ultimate ownership structure remain uncertain.
Investor Verification Items
- Confirm whether a restructuring support agreement was executed after the filing date and review its final terms.
- Verify the treatment of the 12.0% senior secured notes due 2025, including any debt-for-equity exchange, maturity changes or recovery expectations.
- Track the SeaMex provisional liquidation, market-testing results and any proposed sale or restructuring transaction.
- Verify collection prospects for the approximately $245 million of unpaid Pemex invoices.
- Confirm whether noteholders approved access to the mandatory offer holding account and whether SeaMex received sufficient interim liquidity.
- Review subsequent filings for any impact on SeaMex operations, guarantees, debt ownership or Fintech’s equity interest.