Seadrill Ltd (NYSE: SDRL) is making a strong run for the top in the market this morning, and for good reason. The company announced the results of a vote surrounding its Chapter 11 Plan of Reorganization. Of course, the vote was positive, leading to excitement among investors and sending the stock on a strong upward run. Today, we’ll talk about:
- The results of the vote;
- what we’re seeing from the stock as a result;
- risks to consider when investing in SDRL;
- and what we’ll be watching for ahead.
SDRL Announces Reorganization Vote Results
As mentioned above, Seadrill is having a strong day in the market today after announcing the voting results surrounding the company’s Chapter 11 Plan of Reorganization. In a press release issued early this morning, the company announced that the results were nearly unanimous and in support of the company’s plan. Of 530 creditor ballots, 529 or 99.8% of them came back with a yes vote in support of the restructuring plan.
From a shareholder standpoint, the vote was also positive. Of approximately 29 million shares voted, 24.938115 million voted in acceptance of the plan. As a result, the plan has received approval from every class of creditor and holder entitled to a vote. This means that the overwhelming positive vote will lead to SDRL moving forward with their reorganization plans.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that it’s important to watch the news closely. After all, the news moves the market! In this particular case, the news released by Seadrill proved to be overwhelmingly positive. With broad approval surrounding the company’s plans to reorganize under the chapter 11 bankruptcy, the company can now move forward in building what is hoped to be a solid foundation for growth. Of course, our partners at Trade Ideas were the first to alert us to the gains. At the moment (9:06), SDRL is trading at $0.24 per share after a gain of $0.03 per share or 14.63% thus far today.
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Risks To Consider
Any time you make an investment in any asset, you’re taking on some risk. In this particular case, the risk is relatively high. While the company is reorganizing, which will set it on a more solid foundation, it is important to look at the historic performance of any company when making an investment. Let’s not forget that the past hasn’t been great for SDRL. At the end of the day, they are in the midst of bankruptcy proceedings for a reason. At the end of the day, the company has a bad history of making bad financial moves. This in combination with the continued hardships seen within the oil and gas sector suggests that this stock is still a very high risk proposition.
What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on SDRL. In particular, we’re interested in following the reorganization of the company and excited to see the next moves following approval. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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