Seadrill Ltd (NYSE:SDRL) is tanking today following a warning from the company about restructuring plans.
Seadrill Ltd says that it has been negotiating with banks about its debt and liabilities, which are currently sitting at $14 billion. However negotiations aren’t moving as quickly as the company hoped. It wants to reach an agreement by mid-February, or else risk Chapter 11 bankruptcy.
Seadrill Ltd wants to extend bank maturities to 2021 to 2023. It is also looking to extend the maturity of unsecured claims to between 2025 and 2028. The company is hoping reach an agreement for restructuring its debt before a bond matures on April 30. If it does, it will start the process in its second quarter of the year.
Part of the reason for Seadrill Ltd’s restructuring plans being delayed has to do with the number of banks involved. There are currently 42 banks that are part of the plan. The restructuring is also made more complicated because it includes the oil drilling company’s numerous subsidiaries, reports Reuters.
Seadrill Ltd is also seeking to raise $1 billion more in new capital. It likely hopes that this will allow it to continue operations as it works on negotiations for its restructuring plan. The company has been hurt by lower oil prices and offshore rigs that aren’t turning a profit.
Seadrill Ltd is also warning shareholders that there may be major dilution ahead. The company’s ad hoc committee of bondholders has also suggested getting rid of common shareholders of the stock, Seeking Alpha notes.
SDRL stock was down 26% as of Noon Tuesday and is down 43% year-to-date.