Offshore drilling services company Seadrill Ltd. has made "significant progress" with its banks on the terms of a debt restructuring plan that will likely require filing for bankruptcy in the U.S. or U.K.
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Seadrill said Wednesday it is in advanced talks with secured lenders and third-party investors on the terms of a "comprehensive recapitalization." Absent an additional extension from creditors, Seadrill faces a July 31 deadline for implementing a restructuring plan.
"While discussions with our secured lenders and certain investors have advanced significantly, a number of important terms continue to be negotiated and no assurance can be given that an agreement will be reached," Seadrill said.
A restructuring will likely involve converting Seadrill's bond debt into equity. Any recovery for existing shareholders would be minimal at best, the company said.
Seadrill said in April it may seek bankruptcy protection in the U.S. or a scheme of arrangement, which is a court-supervised debt restructuring in the U.K. comparable to chapter 11.
Seadrill also announced Wednesday that Chief Executive Per Wullf will be stepping aside at the end of June and will be replaced by the company's chief commercial officer, Anton Dibowitz. Mr. Dibowitz joined Seadrill in 2007 and since last year has been responsible for the company's daily business administration.
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"There are short-term challenges to overcome in Seadrill and the industry but I look forward to playing my part in returning Seadrill to growth, together with the great team we have working here," Mr. Dibowitz said in a statement.
The publicly traded Seadrill is controlled by shipping magnate John Fredriksen. The company has been in talks with bondholders and lenders over restructuring more than $10 billion in debt. Seadrill reported Wednesday earnings before interest, tax and amortization of $291 million for the first quarter of 2017, down from $528 million for the same period a year earlier.
With crude prices hovering around $50 a barrel, oil companies have cut expenditures on drilling, and that, coupled with a glut of rigs, has put rig owners under severe pressure. Last week, offshore service provider GulfMark Offshore Inc. filed for bankruptcy protection in the U.S. after striking a restructuring deal with its bondholders. Hercules Offshore Inc., Paragon Offshore PLC and Vantage Drilling have also passed through bankruptcy court since oil and gas prices cratered.
Patrick Fitzgerald contributed to this article.
Write to Jonathan Randles at Jonathan.Randles@wsj.com
(END) Dow Jones Newswires
May 24, 2017 16:41 ET (20:41 GMT)