Seadrill Ltd (NYSE:SDRL) is making waves with its nearly 30% gain on more than four times its average volume. SDRL stock holders can thank a massive equity infusion for that.
The piece in question reports that Seadrill could receive a cash infusion of up to $1.2 billion courtesy of Seadrill’s largest stakeholder and chairman, John Fredriksen. The loan — which could be from between $800 million and $1.2 billion — reportedly comes part and parcel with a potential debt restructuring deal with banks and bondholders.
The news came via an anonymous source, as the proposal features a group of less than 10 banks in private talks. Seadrill initially rose 46% on the news, but has since modestly tempered those gains to “just” 28%.
This isn’t the first time this year that SDRL stock has spiked. Shares popped huge in early March, only to tumble lower until now. For the year, Seadrill stock is off 19.5%, as the rout in crude oil prices has forced offshore drillers to slash costs and dividends, and strategically maneuver contracts and idle rigs.
And with more than $4.3 billion in current liabilities on its balance sheet, Seadrill has the largest debt load in the industry. Its cash pile of just $1.4 billion — not nearly enough to pay off the impeding $2.4 billion in debt that’s soon due, and far less than its $8 billion in IOUs — has caused investor panic.
Today’s news assuaged those concerns.
In response to Bloomberg‘s article, Seadrill released the following:
“Seadrill Limited (“Seadrill”) advises that it is aware of an article published by Bloomberg today regarding the Company’s ongoing refinancing and recapitalization plans. We refer to our previously published communications in this regard. The Company remains in discussions with its stakeholders regarding its refinancing and recapitalization plans and there are no material developments to disclose. This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.”
The $1.2 billion proposal is reported to be vetted by as many as 42 Seadrill lenders and bondholders.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.
