* Restructuring $14 bln in debt and liabilities
* Restructuring talks extended by 3 months to July 31
* CEO says Fredriksen involved in the talks
* Shares fall to record low
(Adds detail on Seadrill bonds)
By Ole Petter Skonnord and Terje Solsvik
OSLO, April 4 Drill rig operator Seadrill
warned investors that its shares will lose almost all
of their value and its bonds will be hit as the Norwegian
company prepares for potential bankruptcy proceedings to
restructure $14 billion in debt and liabilities.
Shares in Seadrill, once the crown jewel in shipping tycoon
John Fredriksen's empire, fell as much as 46 percent on Tuesday
to a record low. The company has been hit by low oil prices,
which have forced oil companies to cut costs, hammering rig
Seadrill, which first warned in February that Chapter 11
bankruptcy protection was a risk, said in a statement that its
banks and other lenders had agreed to extend restructuring talks
by three months to July 31.
In February, finance sources said Fredriksen, who owns
almost a quarter of Seadrill, might put in more of his own money
if other investors followed suit. Fredriksen has
put up money in the past when a restructuring of his other
businesses was required. But Seadrill's statement on Tuesday
dampened these prospects.
The company is negotiating with more than 40 banks,
including Norway's DNB, Sweden's Nordea and
Denmark's Danske Bank, as well as with bondholders
and several rig-building yards.
Seadrill said extending the deadline of the talks would
allow additional time to negotiate with banks as well as
potential new investors, but the outlook was grim for
"We currently believe that a comprehensive restructuring
plan will require a substantial impairment or conversion of our
bonds, as well as impairment, losses or substantial dilution for
other stakeholders," Seadrill said.
"As a result, the company currently expects that
shareholders are likely to receive minimal recovery for their
existing shares ... We expect the implementation of a
comprehensive restructuring plan will likely involve schemes of
arrangement or Chapter 11 proceedings," it said.
Thomas Larsen, a credit analyst at brokerage DNB Markets,
said: "The comment about Chapter 11 was previously said, but
today Seadrill is a little bit more vocal about it."
Seadrill Chief Executive Per Wullf told Reuters that
Fredriksen, the company's chairman and top shareholder with a
23.6 percent stake, is still involved in the restructuring
"They are still part of it," Wullf said, referring to
Fredriksen and his family holding company Hemen, which owns
multi-billion dollar stakes in industries ranging from fish
farming to oil tankers and real estate.
The CEO declined to say whether Hemen or Fredriksen were
prepared to inject cash as part of the restructuring.
"I can't say anything more about that now. We're in the
middle of negotiations," Wullf said.
Harald Thorstein, a close collaborator of Fredriksen,
declined to comment.
Larsen at DNB Markets, which has a "sell" recommendation on
Seadrill, said it was now likely the debt restructuring would
involve legal proceedings. "We expect this deal will probably
have to involve some court process," he said.
Seadrill's $1bn 5.625 percent September 2017 note
was unchanged on Tuesday, bid at 40.5 percent of
face value according to Thomson Reuters data.
This is up from lows of 32 percent of face value hit at the
start of March, pointing to greater optimism among bond
investors about the chances of getting higher recoveries in the
(Additional reporting by Gwladys Fouche and Nerijus Adomaitis
in Oslo, Jonathan Saul and Robert Smith in London; editing by
Alexander Smith and Jane Merriman)