Seadrill Ltd (NYSE:SDRL) stock was tanking on Wednesday following an announcement from the company.
In this announcement, Seadrill Ltd said that it is expecting to face “substantial impairment” or conversion of its bonds. The company also notes that there will likely be impairments and losses for those with a stake in its business, which isn’t good for SDRL stock.
The company says that shipyards will likely be included in stakeholders that will see losses due to its ongoing restructuring plan. As a result of these issues, Seadrill Ltd says that those that own SDRL stock are unlikely to see much in the way of recovery from their shares.
Seadrill Ltd also notes that its restructuring plan won’t go off without a hitch. While it hasn’t had to yet, the company says that it expects the plan will require it to undergo Chapter 11 bankruptcy protection.
Seadrill Ltd points out that its business operations are not being affected by its restructuring plan. It says that this means it still expects to fulfill its promises to customer and complete business counterparty obligations.
Seadrill Ltd says that it has been given an extension on a certain loan. This includes pushing back the maturity date of a $400-million loan from Aug. 31, 2017 to Sept. 14, 2017. SDRL now also has an extension with its bank group for its comprehensive restructuring plan negotiating period that pushes it back to Sept. 12, 2017.
SDRL stock was down 20% as of noon Wednesday and is down 88% year-to-date.
As of this writing, William White did not hold a position in any of the aforementioned securities.