The current shareholders of Seadrill should expect to lose almost all value of their stock as the company prepares for potential bankruptcy proceedings to restructure debt and liabilities of $14 billion, the rig firm said on Tuesday.Previously in 2014.
It also said that its banks and other lenders had agreed to extend ongoing restructuring talks by three months to July 31.
"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 in a statement.
"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, and we are preparing accordingly," it added.
Company has a note due September 2017 that was offered at 41 cents today, which is a yield to maturity of >300%. The September 2020 note also trades at about 40, so the yield curve is totally inverted (i.e. the bonds are trading at an estimated recovery value not on a yield basis).