Seadrill Ltd (SDRL) Stock Soars Amid Bankruptcy Filing

SDRL is moving forward with its restructuring plan

Seadrill Ltd (NYSE:SDRL) stock was on the rise Wednesday following a Chapter 11 bankruptcy announcement.

Seadrill Ltd (SDRL) Stock Soars Amid Bankruptcy Filing

Seadrill Ltd says that it has filed for prearranged Chapter 11 bankruptcy cases in the Southern District of Texas. The company notes that this is part of its new restructuring plan. During this bankruptcy, the company will continue to operate as normal.

Seadrill Ltd’s bankruptcy announcement also includes details of a new agreement with its lenders. This agreement gives the company an additional five years before its loans mature. It also won’t require amortization payments until 2020.

Seadrill Ltd says that roughly 97% of its secured bank lenders have signed on to this new agreement. It also has the support of 40% of SDRL stockholders and a consortium of investors that is led by Hemen Holding Ltd., which is SDRL’s largest shareholder.

SDRL stock is likely getting boost from this agreement and the benefits it offers to the company. This includes an additional $1.06 billion in capital. The new capital is made up of $860 million in secured notes and $200 million in equity.

“As part of the restructuring process, Seadrill has successfully ring-fenced its non-consolidated affiliates from the Company’s restructuring, including Seadrill Partners LLC, SeaMex Ltd., Archer Limited and their respective subsidiaries,”  Seadrill Ltd says in its bankruptcy announcement.  “These non-consolidated affiliates did not file chapter 11 cases, and we expect their business operations to continue uninterrupted.”

Seadrill Ltd is getting restructuring advice from Alvarez & Marsal. Its legal advisor is Kirkland & Ellis LLP and Houlihan Lokey, Inc. is serving as its financial advisor.

SDRL stock was up 9% as of noon Wednesday, but is down 92% year-to-date.

As of this writing, William White did not hold a position in any of the aforementioned securities.

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