* Negotiations taking longer than anticipated
* Seeking to boost $1 bln in new capital
* Current possession stakes will likely be diluted
* Lenders additionally threat losses from restructuring
* Shares slide 25 pct earlier than gradual restoration (Adds firm’s assumptions on rig charges, remark, updates share)
By Gwladys Fouche and Joachim Dagenborg
OSLO, Jan 31 Oil rig agency Seadrill is seeking to elevate at the very least $1 billion in new capital because it warned talks to restructure debt and liabilities value $14 billion are taking longer than anticipated, wiping 1 / 4 off its market worth.
Once the crown jewel within the empire of transport tycoon John Fredriksen, Oslo-listed Seadrill’s shares have fallen 90 p.c up to now three years as plunging crude costs and drastic spending cuts amongst oil corporations have pushed each day rig charges for oil drillers down in the direction of breakeven.
Although an oil worth rise has helped some providers suppliers get well, corporations equivalent to Seadrill Transocean and Vallourec have lagged as surplus offshore rigs constructed through the growth are actually mendacity idle, whereas debt repayments should nonetheless be honoured.
Seadrill’s heavy debt and repeated delays to its refinancing plan have additionally spooked traders.
Tuesday’s announcement targeted on the corporate’s $eight.2 billion secured debt. In addition, Seadrill has unsecured debt of $2.3 billion and contingent liabilities of $3.5 billion, bringing its whole liabilities to $14 billion.
“These negotiations have proved to be more complex than we had originally anticipated,” Seadrill CEO Per Wullf mentioned in a press release. Some 42 banks are concerned within the talks on high of the bondholders.
“Nevertheless, key stakeholders have demonstrated a clear desire to be part of a solution and with the right structure and terms we believe there is significant capital available to us,” he mentioned.
Hemen Holding, one in every of Fredriksen’s funding autos, is the highest shareholder in Seadrill with a stake of 23.61 p.c.
HIGHER RIG RATES REQUIRED
“Seadrill has mostly found agreements with its banks, but has not quite found a solution with everyone else,” mentioned Carnegie analyst Frederik Lunde.
“They warn that, if they don’t reach their target by mid-February, they will move towards Chapter 11. So this means they will be negotiating in overtime over the next two weeks.”
In a confidential notice to bondholders in December, which Seadrill launched on Tuesday, the corporate mentioned an settlement with all key stakeholders could be required by the top of January.
“We intend to solicit support for the Recapitalisation Plan so that it may be implemented out-of-court, through Schemes of Arrangement or through Chapter 11,” referring to chapter safety supposed to permit an organization to restructure its debt whereas persevering with to function.
The firm relies upon nevertheless on a surge in rig charges over the following a number of years for its proposed restructuring to achieve success, the paperwork launched on Tuesday confirmed.
For its key floater rigs, the plan assumed a rise of 133 p.c in charges to $420,000 per day in 2020 from simply $180,000 in 2017.
“In our view it is just a little bit excessive and on the optimistic facet, Clarkson Platou credit score analyst Eirik Roehmesmo advised Reuters.
Shares in Seadrill, which initially fell by virtually 25 p.c, have been down 14.4 p.c at 1158 GMT, towards a flat European oil and gasoline index.
Seadrill now plans to boost at the very least $1 billion in new capital; prolong financial institution maturities to the interval from 2021 to 2023, scale back fastened amortisation and amend monetary covenants; and prolong the maturity of unsecured claims to mature within the interval from 2025 to 2028.
Seadrill goals to succeed in a restructuring deal earlier than the maturing of a bond on the West Eminence rig on April 30 and if it does, the plan could be applied through the second quarter.
The restructuring is advanced as a result of it entails so many events but in addition as a result of it entails a number of Seadrill subsidiaries, together with North Atlantic Drilling Seadrill Partners, Archer, Sevan Drilling and Asia Offshore Drilling. (Additional reporting by Terje Solsvik, enhancing by Richard Pullin and Louise Heavens)