Houlihan Lokey Advises Seadrill Limited

Houlihan Lokey is pleased to announce the successful $7 billion restructuring and recapitalization of Seadrill Limited (Seadrill). The transaction involved a $350 million new capital raise, a $6 billion reduction of liabilities, and a material simplification of the balance sheet by rationalizing 12 separate debt silos into one issuer.

Seadrill is a leading offshore drilling contractor serving customers across harsh and benign locations around the world. The company owns and operates 42 drillships, jack-ups, and semisubmersibles. Like many companies in the sector, Seadrill was impacted by an industry-wide downturn compounded by the COVID-19 pandemic and engaged with its stakeholders to recapitalize its balance sheet. Seadrill filed for Chapter 11 bankruptcy process in February 2021 (and a parallel Bermuda process later on) to finalize and implement the recapitalization.

On behalf of Seadrill, Houlihan Lokey structured and negotiated a comprehensive restructuring transaction that achieved consensus among Seadrill’s two largest stakeholder groups. This led to a plan support agreement (PSA) and filing of the Chapter 11 Plan (the “Plan”) with support of more than 57% of senior secured lenders. The Plan involved (i) reduction of the $5.6 billion senior secured bank debt to $683 million second lien takeback debt, (ii) severing of guarantees on the $536 million senior secured notes, (iii) restructuring of the $1.1 billion of lease obligations, and (iv) raising $350 million of new financing through the $300 million first lien facility ($125 million undrawn RCF and $175 million term loan) and $50 million unsecured convertible bond. The Plan was confirmed on October 26, 2021, with almost unanimous support from Seadrill’s stakeholders, and Seadrill emerged from Chapter 11 on February 22, 2022.