Pacific Drilling Files for Chapter 11 Bankruptcy
NYSE-listed offshore drilling contractor Pacific Drilling filed for Chapter 11 bankruptcy in an effort to restructure $1.1 billion in bond debt. This is the second time in three years that the company has filed for Chapter 11.
The Luxembourg-based company announced on Friday that it had filed voluntary petitions for Chapter 11 relief with the United States Bankruptcy Court for the Southern District of Texas and entered into a restructuring support agreement with an ad hoc group of the main holders of its outstanding bonds. debt. The deal will eliminate approximately $1.1 billion in principal from Pacific Drilling’s outstanding bond debt in a debt/equity swap.
The company’s operations this year have been impacted by the COVID-19 crisis and its negative impact on global oil demand. “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,” the company said.
Pacific Drilling said it expects to exit Chapter 11 by the end of the year with access to new capital in the form of an $80 million exit facility and with approximately $100 million dollars of cash and cash equivalents on the balance sheet.
The company before filed for Chapter 11 in November 2017 to restructure to approximately $3 billion in outstanding debt amid the unprecedented and prolonged downturn in the offshore drilling industry after oil prices began to crash in late 2014. It is appeared about a year later raised $1.5 billion in new capitalconsisting of $1.0 billion of new secured notes and $500 million of equity.
“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 and potential clients and, subject to court approval, pay in full all obligations incurred during the Chapter 11 case,” the company said in a statement last Friday.
“After spending several months evaluating options to meet our long-term financial needs in light of the challenging market and operating conditions, we are pleased to reach an agreement with an ad hoc group of our noteholders which opens the heading for a rapid Chapter 11 restructuring process,” commented Bernie Wolford, President and CEO of Pacific Drilling. “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 ‘commodity prices are low today. I appreciate the continued support of our employees, customers and suppliers as we complete this accelerated restructuring process. We remain committed to providing the most safe, most efficient and most reliable in the industry.