The time is about to run out for Seadrill
Rig and Ship owner John Fredriksen is still prepared to go to court to secure refinancing of his failing rig giant company Seadrill.
Seadrill Wednesday announced that the company has been granted an extension from their bank connections for coming up with a restructuring plan until September 12th. At the same time, the company announces that a substantial loan of USD 400 million has been granted a 14 days extension until September 14th.
In the previous round, the deadline for completing negotiations on the restructuring was July 31st.
With net interest-bearing debt of a staggering USD 8.2 billion, there are few that have not noticed that Seadrill needs to put a full financial restructuring in place. According to Finansavisen, John Fredriksen and Seadrill have a well-known weapon in their arsenal when negotiations go into the final phase.
The company reaffirms that it is prepared to go to court to enforce its preferred solution.
Bankruptcy protection under US law, referred to as Chapter 11, is likely to be included in the restructuring plan. Shareholders will want debt converted into shares, but do not want to take over the operation of the company. In case of bankruptcy, the shareholders risk losing more of what they have outstanding than by an alternative restructuring plan.
Worthless shares for the current owners of Seadrill
According to Finansavisen, the shareholders in Seadrill have not received dividends since September 2014 and have seen huge losses in their equity positions. The company once again clarifies that the shareholders in the rig giant will probably be left with worthless shares after the restructuring.
– Probably the comprehensive restructuring plan will lead to (…) significant losses for shareholders. As a result, the company expects shareholders to receive minimal returns for their current shares, according to Finansavisen.