Seadrill Ltd (NYSE: SDRL) is having an overwhelmingly rough day in the market today after various reports have surfaced that some bondholders are looking to take their fight against the company to the legal level with regard to its plans to restructure. Of course, this led to concern among investors, causing declines in the value of the stock and prompting our partners at Trade Ideas to alert us to the drop. At the moment (10:32), SDRL is trading at $0.40 per share after a loss of $0.08 per share (15.78%) thus far today.
SDRL Restructuring Plans
As mentioned above, Seadrill is having an incredibly rough day in the market after reports have surfaced that bondholders have gotten together to fight the company's restructuring plans. According to various reports, some bondholders have hired Strook & Strook & Lavan LLP as legal counsel to fight against the company's plans to restructure under Chapter 11 bankruptcy.
Last week, SDRL announced that it had filed for Chapter 11 bankruptcy protection after closing a deal with banks and a minority bondholder. Through the deal, the company would receive approximately $1 billion in new capital as well as extend or convert around $8 billion in loans into equity in the company. The funds would be received through $860 million in secured loans as well as an additional $200 million as the result of the sale of new equity.
Unfortunately, however, this restructuring plan would happen at the detriment of investors. In fact, if the agreement does move forward, current shareholders will be left with only about 2% of the post-restructuring company. Nonetheless, shareholders seemed to be excited about the news, as the restructuring plan would put SDRL on strong financial footing. However, should the bondholders have their way, the restructuring plan will be blocked and the c-suite will be back to the drawing board!
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What We'll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping a close eye on SDRL. In particular, we're interested in following the story surrounding restructuring as well as seeing if the plans actually take place. Nonetheless, we'll continue to follow the story closely and bring the news to you as it breaks!
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