Seadrill Partners LLC (2020) – Drillship Operator Emerges from Bankruptcy Owned by Prepetition Term Loan Lenders Having Equitized $2.8bn of Debt

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May 24, 2021 – Seadrill Partners notified te Court hearing their cases that they emerged from bankruptcy as of May 24, 2021 [Docket No. 586]. The Debtors' Fourth Amended Plan of Reorganization was confirmed on May 14th.

On December 1, 2020, Seadrill Partners LLC and 28 affiliated Debtors (“Seadrill Partners” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Texas, lead case number 20-35740 (Judge Jones). At filing, the Debtors, London-based owners and operators of drillships, semi-submersible rigs and tender rigs in the United States, Angola, Thailand, Canada, Equatorial Guinea, Nigeria, Indonesia, Ghana and internationally, noted between 1,000 and 5,000 creditors; estimated assets of $4,579,300,000; and estimated liabilities of $3,122,300,000.

The Debtors were represented by (i) Jackson Walker LLP as local bankruptcy counsel, (ii) Kirkland & Ellis as general bankruptcy counsel, (iii) Evercore Partners as financial advisor and (iv) M-III Partners LP as restructuring advisor.

Deadlines in respect of administrative claims and professional fee claims have been set for 30 days (June 24, 2021) and 45 days (July 9, 2021) after the effective date, respectively.

In a press release announcing their emergence, the now former Debors stated: "The Plan has equitized approximately $2.8 billion in funded debt obligations, leaving the Company debt free on emergence. As part of the Plan, New Management Services Agreements were entered into for the management of the Company's offshore drilling units and a Transition Services Agreement was agreed to with the Company's prior manager that provides for a safe and efficient transition. Additionally, the Plan has resolved all potential claims against the Company alleged by related parties, secured and unsecured creditors.

The Plan leaves the Company well positioned to secure drilling contracts and invest in its high specification ultra-deepwater, harsh environment and tender rig fleet going forward.

Issuance of Shares of the New Common Stock

On the Effective Date, existing equity interests in the Company will be canceled, released, and extinguished and will be of no further force or effect. The Company will issue 20 million shares of the New Common Stock, which will be allocated as set forth below, in accordance with provisions of the Plan and issued on the Effective Date:

  • 31.8% of the New Common Stock held by holders of super senior term loan claims against the Company and certain of its Chapter 11 debtor affiliates [a 100% recovery on $151.0mn of prepetition debt]; and
  • 68.2% of the New Common Stock held by holders of TLB secured claims against the Company and certain of its Chapter 11 debtor affiliates [a 12.3% recovery on $2.637bn of prepetition debt].

New Board of Directors

In accordance with the Plan, a newly constituted Board of Directors of the Company was appointed today, consisting of Steven L. Newman (CEO/Director), Alan S. Bigman, John Bishop, Daniel C. Herz, and N. John Lancaster, Jr."

Plan Summary

The Debtors’ memorandum of law in support of Plan confirmation (the "Memorandum") [Docket No. 557]  provides: “Only five months after filing these chapter 11 cases, the Debtors are prepared to confirm the Plan that will, once effectuated, equitize all of the Debtors’ approximately $2.8 billion of funded indebtedness, resolve historical intercompany disputes, implement the New Management Services Agreements for the Debtors’ new go-forward operators, position the Debtors for success in meeting their long-term strategic goals, and maximize value for their stakeholders. 

More specifically, all of the prepetition funded debt under the TLB Credit Agreement and other TLB Finance Documents will be equitized pursuant to the Plan. Holders of Super Senior Term Loan Claims will receive their Pro Rata share of 31.8% of the New Common Stock [in exchange for $151.0mn of prepetition debt resulting in a 100% recovery] in the Reorganized Debtors; and Holders of TLB Secured Claims will receive their Pro Rata  share of 68.2% of such stock [in exchange for $2.637bn of prepetition debt resulting in a 12.3% recovery ] unless a Holder elects to receive Cash. Moreover, the Court-approved intercompany settlement between the Seadrill Parties and the Debtors was no small feat. It resolves litigation over amounts accrued on account of management services rendered in connection with the Debtors’ rigs, which includes amounts that Seadrill Limited asserted as secured, and significantly reduces the size of the General Unsecured Claims pool. Similarly, the Debtors negotiated the Confirmation Settlement to resolve potential claims alleged by the Committee and its members regarding the Plan, which settlement increases the recovery for Holders of General Unsecured Claims by $1.5 million or 200% in the aggregate and otherwise resolves key claims with some of the Debtors’ major creditors.

Moreover, subject to approval of the Confirmation Settlement provided in the Plan and based on the voting results set forth in the Voting Report (defined below), all Voting Classes (defined below) have overwhelmingly voted in favor of the Plan. As a result of Class 4 and Class 5 voting to accept the Plan, by operation of the Plan, the TLB Deficiency Claim—which would otherwise significantly dilute recoveries for Holders of General Unsecured Claims—shall not be entitled to any distribution under the Plan. The increased recovery underpinning the Confirmation Settlement will therefore be distributed to Holders of all other General Unsecured Claims, meaningfully increasing their pro rata recovery. Complete and final resolution of these and other Claims and Interests is the best-case scenario under which the Debtors can enter into new relationships with well-established service providers, thereby positioning the Debtors for long-term strategic success.

This monumental achievement is the culmination of hard-fought, complex negotiations among the Debtors (including, where appropriate, the Conflicts Committee), the Ad Hoc Committee, the Agent, Seadrill Limited, the Committee, and the Committee members and each party’s respective advisors, as detailed in the Disclosure Statement. The Debtors disclosed the circumstances leading to the Plan Support Agreement and informed parties in interest about the Seadrill Limited Settlement and its impact on the Plan, including the releases. These agreements along with the Confirmation Settlement have garnered consensus for the Plan. All voting creditors in Classes 3 and 4 and the substantial majority of creditors in Class 5 voted to accept the Plan as a result of the Confirmation Settlement, as set forth in the Voting Report.5 Such unequivocal support signals that the proposed restructuring transactions maximize value for stakeholders and are in the best interest of the estates."

The Third Amended Plan [Docket No. 488] incorporated a settlement reached with the Seadrill Limited Debtors, which are Debtors in Chapter 11 cases filed on February 11, 2021 that are being separately administered from the Seadrill Partners LLC cases. A motion for approval of the Seadrill Ltd. Global Settlement was filed at Docket No. 486 and notes that the Settlement resolves “disputes relating to the existing management services agreements under which certain Seadrill Limited Debtors manage SDLP’s and its subsidiaries’ business operations.” The motion also states that the proposed Settlement “assists in removing a material hurdle to achieving a swift and efficient emergence from chapter 11 for both sets of Debtors.” (See more on the Global Settlement below).

Additionally, the Third Amended Plan changes the Other Secured Claims class to unimpaired and deemed to accept the Plan. Before the settlement was reached, that class had been classified as unimpaired/impaired and deemed to accept/reject and was entitled to vote on the Plan.

The following is a summary of classes, claims, voting rights and expected recoveries showing highlighted changes (defined terms are as defined in the Plan and/or Disclosure Statement; see also the Liquidation Analysis below):

  • Class 1 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The approximate amount of claims is $6.4mn and the estimated recovery is 100%. Under the third iteration of the Plan, each Holder will receive, as determined by the Debtors or the Reorganized Debtors, as applicable, with the consent of the Required Consenting Lenders: (i) payment in full in Cash of its Other Secured Claim; (ii) the collateral securing its Other Secured Claim; (iii) Reinstatement of its Other Secured Claim; or (iv) such other treatment rendering its Other Secured Claim Unimpaired in accordance with section 1124 of the Bankruptcy Code.

FN: This amount does not include amounts asserted in Seadrill Limited and Seadrill Management Ltd.’s Emergency Motion for an Order (I) Authorizing Filing of Notices to Perfect Statutory Liens under Applicable Louisiana Law and 11 U.S.C. § 546(b) and (II) Granting Related Relief [Docket No. 264], which amounts were included in Class 5. See Art. VII.G for more information about the lien dispute and related considerations.

  • Class 2 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
  • Class 3 (“Super Senior Term Loan Claims”) is impaired and entitled to vote on the Plan. The approximate amount of claims is $151.0mn and the estimated recovery is 100%. Each Holder will receive its Pro Rata share of 31.8% of the New Common Stock (subject to dilution by any New Common Stock that may be issued pursuant to the Employee Incentive Plan)

FN: The Class 3 / Class 4 equity splits reflect a negotiated resolution of potential intercreditor issues amongst Holders of TLB Claims. Although this resolution implies an enterprise value that is within the valuation range prepared by the Debtors’ advisors, such splits imply recoveries for Holders of Claims in Class 3 that may be below par recoveries at the low end of the valuation range and exceed par recoveries at the midpoint and high end of the valuation range prepared by the Debtors’ advisors presented in Exhibit G.

  • Class 4 (“TLB Secured Claims”) is impaired and entitled to vote on the Plan. The approximate amount of claims is $2.637bn and the estimated recovery is 12.3%. Each Holder will receive its Pro Rata share of 68.2% of the New Common Stock (subject to dilution by any New Common Stock that may be issued pursuant to the Employee Incentive Plan), unless such Holder elects to receive the Cash Out Amount per $1,000 of Class 4 Claims in Cash, subject to the Cash Cap (the “Class 4 Cash Election”). If the total Class 4 Cash Elections would result in distributions of Cash to Holders of Allowed Class 4 Claims in excess of the Cash Cap, then each Holder of a Class 4 Claim that elected to receive Cash will receive its Pro Rata share of: (i) the Cash Cap amount in Cash and (ii) New Common Stock of the value equal to the balance of the recovery such Holder would have received in the absence of the Cash Cap.

For the avoidance of doubt, any TLB Deficiency Claim will be classified as a Class 5 General Unsecured Claim; provided, however, that if (i) Class 4 votes to accept the Plan and (ii) Class 5 Claims votes to accept the Plan, the TLB Deficiency Claims will not be entitled to any distribution under the Plan and will be deemed canceled, released and extinguished.

  • Class 5 (“General Unsecured Claims”) is impaired and entitled to vote on the Plan. The approximate amount of claims is $82.2mn – $2.405bn and the estimated recovery is 0% – 0.9%. of $2.25mn (up from $750k), which amount shall be deposited on the Effective Date into the General Unsecured Claim Distribution Account; provided, that, for the avoidance of doubt, the payment of any fees associated with maintaining the General Unsecured Claim Distribution Account, or the payment of any taxes, penalties, or fees owed on account of any interest earned on the balance in the General Unsecured Claim Distribution Account, shall be made exclusively from the funds held in the General Unsecured Claim Distribution Account and additional reserves may be made by the Reorganized Debtors in their sole discretion to ensure available funds remain for the payments of any such amounts when due.
  • Class 6 (“Intercompany Claims”) is impaired/unimpaired, deemed to accept/deemed to reject and not entitled to vote on the Plan.
  • Class 7 (“Intercompany Interests”) is impaired/unimpaired, deemed to accept/deemed to reject and not entitled to vote on the Plan.
  • Class 8 (“Prepetition Senior Obligation Claims”) is impaired, deemed to reject and not entitled to vote on the Plan.
  • Class 9 (“Prepetition Senior Obligation Claims”) is impaired, deemed to reject and not entitled to vote on the Plan.
  • Class 10 (“Prepetition Senior Obligation Claims”) is impaired, deemed to reject and not entitled to vote on the Plan.

Global Settlement

According to the settlement motion [Docket No. 486], "Not only is the resolution described herein 'fair, equitable and in the best interest' of each of the Parties, but it also assists in removing a material hurdle to achieving a swift and efficient emergence from chapter 11 for both sets of Debtors. It is the result of months of hard-fought negotiations among the Parties. In addition, approval of the Settlement requires modifications to the Second Amended Joint Chapter 11 Plan of Reorganization of Seadrill Partners LLC and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code [Case No. 20-35740, Docket No. 437] (as amended, the 'SDLP Plan') to make it consistent with the terms of the Settlement, including modifications to the debtor and non-debtor releases contained in the SDLP Plan….

Given that the SDLP Debtors began soliciting votes to accept or reject the SDLP Plan prior to filing the SDLP Third Amended Plan, the SDLP Debtors propose distributing a supplemental notice to all parties in interest receiving the confirmation hearing notice to apprise them of the changes reflected in the SDLP Third Amended Plan so that they make fully informed decisions whether to, among other things, 'opt out' of the SDLP Plan’s third-party release provisions. Because the SDLP Debtors do not believe the modifications reflected in the SDLP Third Amended Plan require a re-solicitation of votes on the SDLP Plan, the SDLP Debtors believe this mechanism appropriately balances the need to protect parties’ due process rights and a desire to efficiently use estate resources."

Settlement Terms

The motion further explains, "The Settlement provides for the following material terms, subject to Court approval:

  • SDLP will pay a total fixed amount of $11,250,000, to be paid within 3 business days of the date of entry of the Settlement Order (the 'Effective Date') on account of management services provided, consisting of $2,250,000 per month from December 1, 2020 through April 30, 2021; the fixed fee covers all rigs, regardless of operating status, and access to the capital spares pool through April 30, 2021;
  • SDLP will pay Seadrill Limited operating fees of $25,000 per day for each of the West Vela and West Capella rigs, effective May 1, 2021, through the date that any third party MSA provider is then in control of any respective rig;
  • SDLP will pay Seadrill Limited for unpaid pass-through costs accrued in December 2020, January 2021 and February 2021 in the amount of $6,479,265 within 3 business days of the Effective Date;
  • SDLP shall directly pay restructuring and transition fees to Seadrill Limited in a total amount of $3,000,000, inclusive of, including $750,000 for restructuring services (the 'Restructuring Services Fee') for the period December 2020 through June 2021, and $2,250,000 (the 'Transition Support Fee'), payable in three parts and prorated equally on a per-rig basis, with the initial payment of 33% within three days of the Effective Date, 33% within 60 days of the Effective Date and 33% no later than June 30, 2021; provided, however that the final 33% for the West Vela and West Capella rigs will be paid on the earlier of (i) turnover or (ii) sixty (60) days after the end of the operating period (as applicable to each rig);
  • Within 3 business days of the Effective Date, SDLP will fund $9 million in cash, which is equal to an estimated 60 days of payments (based on historical payments, estimated and agreed among the Parties prior to the Effective Date) due to Seadrill Limited under this Settlement into a separate, segregated SDLP bank account to be used for the sole purpose of securing payments under this Settlement (the 'Segregated Account');
  • Seadrill Limited shall waive all claims it may hold with respect to the SDLP estates, whether administrative, general unsecured or otherwise, including, for the avoidance of doubt, any lien claims under Louisiana law;
  • SDLP shall waive all claims against Seadrill Limited’s estates, including, for the avoidance of doubt, those related to the $19.4 million cash sweep from November 2020;
  • each of the Parties will support SDLP and Seadrill Limited in connection with their respective restructurings and confirmation of a chapter 11 plan of reorganization in each other’s chapter 11 cases and will not object to confirmation of the other’s Plan, except to the extent inconsistent with this Settlement;
  • the Settlement Order will contain full mutual debtor releases of all claims and causes of action, other than the Parties’ obligations under the Settlement, by (a) SDLP in favor of Seadrill Limited and its affiliates, related parties and, for the avoidance of doubt, current and former directors and officers and (b) Seadrill Limited in favor of SDLP and its affiliates, related parties and, for the avoidance of doubt, current and former directors and officers;
  • within three business days after the Effective Date, SDLP will amend the SDLP Plan and corresponding disclosure statement to modify the debtor and third-party releases to be consistent with the Term Sheet;
  • Seadrill Limited shall provide data for each SDLP rig, including data related to direct-hire personnel, bank accounts, insurance policies, legal-entity history and capital spares, among other things; and
  • Seadrill Limited shall provide appropriate access to certain shore-based and offshore personnel."

Change to "Releasing Party" Definition (added language in bold)

Releasing Party” means each of, and in each case, in its capacity as such: (a) the Agent; (b) each Consenting TLB Lender; (c) the Seadrill Parties; (d) all Holders of Claims or Interests, solely in their capacities as such; (e) each Related Party of each Entity in clause (a) through the following clause (f); and (f) each current and former Affiliate of each Entity in clause (a) through this clause (f); provided, however, that any party that opts out of the releases shall not be a Releasing Party.; provided, further, however, that any Holder of Interests who acquired such Interests after the Voting Record Date (as such term is defined in the Disclosure Statement Order) and did not receive an opt out election form shall not be a Releasing Party.

Relationship with Seadrill Limited

Seadrill Partners' chief restructuring officer, Mohsin Y. Meghji, summarized the relationship between the SDLP and Seadrill Limited Debtors, as well as the issues that led to the Global Settlement, in a declaration filed in support of the motion (the "Meghji Declaration" [Docket No. 487]). The Meghji Declaration explains, "SDLP was formed in June 2012 to own and acquire offshore drilling rigs, while maintaining its own capital structure apart from its parent company, Seadrill Limited. SDLP has historically relied on Seadrill Limited for services needed to run its businesses in a relationship governed by a series of management and administrative services agreements.

Specifically, Seadrill Management Ltd. — which is an affiliate of Seadrill Limited — and SDLP are parties to the Umbrella MSA. Seadrill Management Ltd. and other affiliates of Seadrill Limited perform services under agreements related to or ancillary to the Umbrella MSA that together comprise the MSAs. The services provided under the MSAs include employee and contractor staffing, corporate administration, treasury and finance functions, legal compliance and other critical functions necessary to maintain SDLP’s fleet.

On December 4, 2020, the Court entered the SDLP Debtors’ Interim Order (I) Authorizing Postpetition Use of Cash Collateral, (II) Granting Adequate Protection to the TLB Secured Parties, (III) Modifying the Automatic Stay, (IV) Scheduling a Final Hearing, and (V) Granting Related Relief [Case No. 20-35740, Docket No. 77] (the 'Interim Cash Collateral Order'). Subsequently, the Parties entered a stipulation regarding the Interim Cash Collateral Order that authorized SDLP to make a payment of $3.5 million to Seadrill Limited on account of amounts due under the MSAs [Case No. 20-35740, Docket No. 106] (the 'Stipulation'). Both the Interim Cash Collateral Order and the Stipulation prohibited SDLP from making any additional payments on account of asserted prepetition amounts owed to Seadrill Limited absent a further order of this Court.

SDLP or its lenders have asserted, among other things, various prepetition claims under or related to the MSAs against Seadrill Limited. These include assertions of historical overcharging, misallocation of resources and avoidable transfers and also include assertions that Seadrill Limited improperly swept $19.4 million of SDLP’s cash shortly before the Petition Date to repay overdue amounts under the MSAs. As described in the Motion, the MSA Settlement contemplates that the Debtors will mutually waive prepetition claims against each other, including the Seadrill Limited Debtors’ lien claims and the SDLP Debtors’ claims related to the prepetition application of cash in satisfaction of alleged amounts owed under the MSAs.

SDLP will settle Seadrill Limited’s postpetition claims for management services with a mutually agreed cash payment, consisting of full payment of passthrough costs incurred on behalf of the SDLP Debtors, plus an agreed payment for allocated overhead. The Parties have also agreed to the scope and cost of transition and restructuring support services that the Seadrill Limited Debtors will provide to effectuate the transition to the SDLP Debtors’ new management service providers, as well as the timing of related payments to be made by the SDLP Debtors in respect thereof.

In the course of their respective restructuring processes, the Seadrill Limited Debtors and SDLP Debtors have independently explored alternatives to the arrangement under the MSAs. This process culminated in SDLP entering into a new master services agreement with Energy Drilling Management Pte. Ltd. with respect to the Debtors’ tender rigs (the 'Energy Drilling MSA') and new management and framework agreements with Vantage Drilling International (the 'Vantage MSA'), Odfjell Drilling, Ltd. (the 'Odfjell MSA') and Diamond Offshore Drilling, Inc. (the 'Diamond MSA,' together with the Energy Drilling MSA, Vantage MSA and Odfjell MSA, the 'New MSAs') with respect to the Debtors’ drillships and semisubmersibles. The New MSAs Orders provide SDLP with management services for certain rigs with new management services providers on terms that SDLP believes are commercially reasonable.

In the wake of SDLP’s entry into the New MSAs and after extensive analysis and good faith, arm’s-length negotiations, the Parties reached a mutual agreement on the terms of the MSA Settlement on April 9, 2021. The MSA Settlement facilitates the smooth transition of management and administrative services from Seadrill Limited to the go-forward operators under the New MSAs, resolves all of the claims mutually asserted amongst the Parties and includes other operational features and transition services….

I further understand the SDLP Plan is not feasible without the MSA Settlement (and the contemplated amendments in the SDLP Third Amended Plan), specifically because the SDLP Debtors require Seadrill Limited’s agreement to provide the necessary transition services to onboard the new MSA providers. Without the MSA Settlement, the transition process would be at great risk of falling apart. The MSA Settlement avoids these risks by providing SDLP with the necessary support, maintenance, and personnel to become an autonomous, competitive rig owner independent of its prior relationship with Seadrill Limited."

Petition Date Perspective

In a press release announcing the filing, the Debtors advised that: “Seadrill Partners LLC (the 'Company') has been in negotiations with an ad hoc group of lenders under the Company's Term Loan B credit facility (the 'TLB') regarding a consensual reorganization of the Company's balance sheet.  In consultation with-and with the support of-the ad hoc group, the Company has filed voluntary petitions under chapter 11 of the Bankruptcy Code to preserve value and to continue the operation and marketing [of] its assets. The Company intends to use the bankruptcy process to ensure that all customer, vendor and employee obligations are met without interruption and to complete a consensual restructuring of its debt.”

The Debtors’ CEO, Stuart Jackson, commented further in a separate November 20, 2020 press release: “Seadrill continues to play its part in establishing a more viable market environment – taking action on scrapping rigs, reducing the cost of operation and support activities and addressing our capital structure. In doing so, we remain committed to the delivery of safe and efficient operations for our customers.

We continue to address the industry issue of too many rigs and too much debt. Managing our rig count is the necessary balance to bringing down our debt burden, and we are progressing plans to safely recycle some of our rigs, subject to the approval of our lenders. We are engaged in constructive discussions with our financial stakeholders as we look to carry out a comprehensive restructuring of our balance sheet and our cash balance provides us with the necessary flexibility to manage this process.”

The November 20th release notes that, on conclusion of a comprehensive restructuring, there is a high probability that the current value of the Debtors' equity will be reduced significantly or to zero value.

Seadrill Partners' parent company, Seadrill Ltd., emerged from its own Chapter 11 case in 2018. A Nasdaq report announcing the Seadrill Partners filing noted: "Seadrill Ltd, which owns 35% of Seadrill Partners, suspended its own interest payments in September after failing to agree amended terms for $5.7 billion of bank debt, and warned that owners may be left with nothing.

Founded by Norwegian-born billionaire investor John Fredriksen, the Seadrill group of companies grew to become the world's most valuable drilling firm before a crash in oil prices in 2014 sent the company into restructuring. Seadrill Ltd emerged from Chapter 11 bankruptcy in 2018 after converting billions of dollars of bonds into equity, but the group's bank debt remained." 

Events Leading to the Chapter 11 Filing

The Debtors said in a 20-F filed for the year ended December 31, 2019 that "Decreases in oil and gas prices for an extended period of time, or market expectations of potential decreases in these prices, have negatively affected and could continue to negatively affect our future performance. In March 2020, members of OPEC and Russia failed to reach an agreement to extend their previously agreed oil production cuts. Consequently, Saudi Arabia has announced a significant reduction in its export prices and Russia has announced that all agreed oil production cuts between members of OPEC and Russia will expire on April 1, 2020. As a result of these announcements, the price of oil fell approximately 20% on March 9, 2020. Later in April, OPEC and Russia had reached an agreement, however, due to the decrease in demand caused by COVID-19 pandemic oil prices have remained low. Even though oil prices have recovered during May, any perceived or actual further reduction in oil prices could have a material adverse effect on our business, financial condition and results of operations.

Continued periods of low demand can cause excess rig supply and intensify competition in our industry, which often results in drilling rigs, particularly older and less technologically-advanced drilling rigs, being idle for long periods of time…In response to the decrease in the prices of oil and gas, a number of our oil and gas company customers have announced significant decreases in budgeted expenditures for offshore drilling. Any future decrease in exploration, development or production expenditures by oil and gas companies could further reduce our revenues and materially harm our business."

An 8-K filed on November 25, 2020 provided more details on the events leading up to the filing. According to the 8-K, "Seadrill Partners LLC (the 'Company') has elected not to make a periodic payment with respect to its swap obligations originally scheduled to come due November 23, 2020 (the 'Swap Payment').

The Company has reached an agreement (the 'Agreement') with Term Loan B ('TLB') lenders representing a majority of the TLB principal amount outstanding to forbear enforcement of any claims, causes of action, rights or remedies with respect to any defaults or events of default that may occur under the TLB relating to the Swap Payment and any resulting acceleration of the Company’s mark-to-market hedging liabilities that may occur. The forbearance under the Agreement will be effective through the maturity date of the TLB unless there is an event of default under the TLB that is not waived by the required lenders."

Prepetition Indebtedness (from the 20-F for the year ended December 31, 2019)

Significant Prepetition Shareholders

Seadrill Partners LLC Holdco Limited, c/o Seadrill Limited, owns 35.0% of the Debtors' equity. In addition, 53.4% is publicly held.

The Debtors' Chapter 11 petition also states that Nicholas Guillan Brown, Reed Warriner and James Ayers have been removed as directors of Seadrill Operating GC LLP and Seadrill Partners Operating LLC, and Neil Derek Gulliver and Leif Nelson have been removed as directors of Seadrill Capricorn Holdings LLC.

Mohsin Meghji and Anthony Horton have been appointed to replace the removed directors. In addition, Meghji and John Thomas Roche will serve as managing directors B of Seadrill Partners B.V.

Key Documents

The Disclosure Statement attached the following exhibits [Docket No. 437]:

  • Exhibit A: Plan of Reorganization
  • Exhibit B: Plan Support Agreement
  • Exhibit C: Corporate Organization Chart (filed at Docket No. 48 Declaration Exhibit A)
  • Exhibit D: Disclosure Statement Order [Docket No. 570]
  • Exhibit E: Liquidation Analysis (separately filed at Docket No. 397)
  • Exhibit F: Financial Projections (separately filed at Docket No. 397)
  • Exhibit G: Valuation Analysis (separately filed at Docket No. 397)

The Debtors filed Plan Supplements at Docket Nos. 529, 560 and 582, which collectively attached the following documents:

Docket No. 529

  • Exhibit A: Assumed Executory Contract and Unexpired Lease List
  • Exhibit B: Rejected Executory Contract and Unexpired Lease List
  • Exhibit C: Retained Causes of Action Schedules
  • Exhibit D: List of Board Members for New HoldCo
  • Exhibit E: Description of Transaction Steps
  • Exhibit F: New LLC Agreement; and
  • Exhibit G: Seadrill Limited Settlement

Docket No. 560

  • Exhibit A: Assumed Executory Contract and Unexpired Lease List
  • Exhibit A-1: Redline to Exhibit A of the Initial Plan Supplement
  • Exhibit B: Rejected Executory Contract and Unexpired Lease List
  • Exhibit B-1: Redline to Exhibit B of the Initial Plan Supplement
  • Exhibit E: Description of Transaction Steps
  • Exhibit E-1: Redline to Exhibit E of the Initial Plan Supplement

Docket No. 582

  • Exhibit A: Assumed Executory Contract and Unexpired Lease List
  • Exhibit A-1: Redline to Exhibit A of the First Amended Plan Supplement

Liquidation Analysis (see Exhibit E of Docket No. 437 for notes)

About the Debtors

According to the Debtors: “We are an offshore drilling contractor providing offshore drilling services to the oil and gas industry. Our primary business is the ownership and operation of drillships, semi-submersible rigs and tender rigs for operations in shallow to ultra-deepwater areas in both benign and harsh environments. We contract our drilling units primarily on a dayrate basis to drill wells for our customers, typically oil super-majors and independent oil and gas companies. We are recognized for providing high quality operations, in some of the most challenging sectors of offshore drilling.

We believe our fleet is comparatively one of the youngest and modern of all the major offshore drilling contractors with an average fleet age of approximately 8.7 years. We currently own and operate a fleet of 11 drilling units, including 4 drillships, 4 semi-submersible rigs and 3 tender rigs.”

Corporate Structure Chart (from 20-F for year ended December 31, 2019)

From Disclosure Statement [Docket No. 437]

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