* Seadrill aims to convert debt into equity
* They need to swallow bitter pill and do it -investor
* If it can't get deal, company may file for Chapter 11
* Q4 EBITDA beats forecast, Q1 EBITDA seen down
By Gwladys Fouche
OSLO, Feb 28 (Reuters) - Rig firm Seadrill, battling with $14 billion in debt and liabilities, said on Tuesday it may have to file for Chapter 11 bankruptcy protection if it fails to reach a restructuring agreement with its lenders.
Once the crown jewel in the empire of shipping tycoon John Fredriksen, Oslo-listed Seadrill's shares have fallen 92 percent in the past three years as plunging crude prices and drastic spending cuts by oil companies hammered rig rates.
The company said it would be challenging to find a "fully consensual agreement" before an April 30 deadline. For months Seadrill has been in discussions with more than 40 banks, as well as bondholders, to reach a deal.
"Feedback from certain stakeholders and potential new money providers ... indicate that a comprehensive and consensual agreement will likely require conversion of our bonds to equity," it said in a statement.
"It is a bitter pill to swallow but they need to do it," said one investor in Fredriksen companies, who declined to be named.
If it can't reach an agreement, Seadrill was "also preparing various contingency plans, including potential schemes of arrangement or Chapter 11 proceedings".
The company posted earnings before interest, taxes, debt and amortisation (EBITDA) in the fourth quarter of $354 million, slightly beating expectations for $345 million, and down from $513 million in the year-ago period.
Seadrill said its first quarter EBITDA would be lower, down to $250 million, adding that the outlook for the oil and gas sector remained "extremely challenging" in the short and medium term. (Editing by Louise Heavens)