October 2, 2017 / 5:00 PM / a year ago

FACTBOX-Seadrill's restructuring plan faces bondholder opposition

Oct 2 (Reuters) - Seadrill, once the largest offshore rig company by market capitalisation, filed for U.S. Chapter 11 bankruptcy protection in Texas on Sept. 12.

The company, controlled by Norwegian-born billionaire John Fredriksen, and its consolidated entities presented a restructuring plan to address $12.8 billion in debt and other liabilities, the biggest bankruptcy ever in the offshore rig industry.

That was backed by holders of 97 percent of its bank loans and 40 percent of its unsecured bonds. But some bondholders are preparing to challenge the plan.

Following are the key elements of the plan:

** Banks will defer maturities of all secured credit facilities, totalling $5.7 billion, by about five years with no amortization payments until 2020

** John Fredriksen, via his family’s investment vehicle, Hemen Investments Limited; Centerbridge Credit Partners L.P.; and a group of investors will invest $1.06 billion by acquiring $860 million of new secured bonds and $200 million of new Seadrill equity

** Other parties committed to the plan are Aristeia Capital LLC, GLG Partners Inc., Saba Capital Management LP and Whitebox Advisors LLC, collectively referred as “Select Commitment Parties”, and also Asia Research and Capital Management Limited (ARCM) and Fintech Investments Ltd (Fintech)

** Hemen and Centerbridge will underwrite the bulk of secured notes and new equity, $462.4 million and $150 million respectively, and will receive around 50 percent of the stock in the reorganised Seadrill

** In addition, Hemen will receive a 5 percent stake as a structuring fee

** The Select Commitment Parties will underwrite $357.6 million of new notes and $50 million of new equity in exchange for around 30 percent of new shares, according to the court documents and Reuters calculations.

** ARCM and Fintech Advisory Inc. will underwrite $15 million and $25 million of new notes respectively, in exchange for about 2 percent and 3 percent of new shares, according to the court documents and Reuters calculations.

** Holders of $2.3 billion of unsecured bonds and other claims will receive about 15 percent of new shares before dilution, with participation rights in both the new secured notes and equity, provided they support the plan

** Certain holders of general unsecured claims will be offered an opportunity to participate in the issuance of $85 million of new secured notes, and $25 million of new equity, reducing the share of other committed parties, including Hemen, and provided they back the plan

** The principal amount of the new secured notes could also be increased up to one billion dollars without requiring any consent from the lenders, provided the equity investment doesn’t fall below $200 million

** Holders of Seadrill’s common stock will receive about 2 percent of the post-restructured equity before dilution, provided unsecured bondholders approve the plan

** Two-thirds of unsecured bondholders in amount of claims, and more than 50 percent in number of claims, need to approve the plan for it to go ahead

** The company’s plans are being challenged by two main groups representing junior creditors: An official committee of unsecured creditors, represented by Kramer Levin Naftalis&Frankel, and an ad hoc committee of investors that hold around a third of the company’s bonds, represented by Kristopher Hansen, of Stroock&Stroock&Lavan, and Rothschild

** Seadrill has hired Kirkland&Ellis LLP as legal counsel, Houlihan Lokey, Inc. as financial adviser, and Alvarez&Marsal as restructuring adviser

** Seadrill’s advisers are running a so-called go-shop until Dec. 11, during which time they will seek an investment similar to Fredriksen’s but at a higher value, which might include better treatment of unsecured creditors

** U.S. Bankruptcy Judge David Jones has set a hearing on March 26, 2018, to confirm Seadrill’s plan

** Seadrill expects to emerge from bankruptcy on Aug. 8, 2018 (Reporting by Ole Petter Skonnord, Nerijus Adomaitis in Oslo and Tom Hals in Wilmington, Delaware; Editing by Mark Potter)

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