Offshore drilling company Pacific Drilling and some of its subsidiaries have filed for Chapter 11 bankruptcy in a bid to eliminate $1.1 billion in debt.
The company, which previously filed for bankruptcy in 2017, said Friday that it and some of its domestic and international affiliates have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the Southern District of Texas. .
Pacific Drilling also said it has entered into a restructuring support agreement with an ad hoc group of major holders of its outstanding bond debt.
“This consensual financial restructuring transaction will eliminate approximately $1.1 billion in principal of the company’s outstanding bond debt through the cancellation and exchange of debt for new equity in the reorganized company,” it said. said Pacific Drilling.
As per usual
“With approximately $120 million in cash and cash equivalents as of October 30, 2020 and seven of the world’s most advanced high-specification drillships, Pacific Drilling intends to continue global operations as usual, to provide services for existing projects and potential clients and, subject to court approval, pay in full all obligations incurred during the Chapter 11 matter,” Pacific Drilling said.
The company said it expects to emerge by the end of the year with access to new capital in the form of an $80 million exit facility and with around $100 million in cash. and cash equivalents on the balance sheet.
“Since the beginning of 2020, the global health crisis caused by COVID-19 and the resulting imbalance in oil supply and demand have caused significant disruptions in global economies and markets, including a substantial decline The impact of these market conditions on Pacific Drilling’s business has been direct and significantly negative, rendering our current capital structure unsustainable over the long term,” Pacific Drilling said.
Bernie Wolford, Chairman and CEO, said: “After spending several months evaluating options to meet our long-term financial needs in light of challenging market and operating conditions, we are pleased to enter into an agreement with a ad hoc group of our noteholders that is paving the way for a speedy Chapter 11 restructuring process.
“This restructuring is intended to improve our financial flexibility by eliminating all of our pre-petition debt and cash interest burden. We expect to emerge from this process in a stronger position to compete in the challenging environment of today, where commodity prices are low. I appreciate the continued support of our employees, customers and suppliers as we complete this accelerated restructuring process. We remain committed to providing the deepest deepwater drilling services safe, most efficient and most reliable in the industry.