Pacific Drilling Announces Arbitration Decision
16 January 2020 - 6:05AM
Business Wire
Pacific Drilling S.A. (NYSE: PACD) (the “Company”) announced
today that an award has been issued in the previously disclosed
arbitration proceedings between the Company’s subsidiaries, Pacific
Drilling VIII Limited (“PDVIII”) and Pacific Drilling Services,
Inc. (“PDSI”), and Samsung Heavy Industries Co. Ltd. (“SHI”)
related to the contract for the construction and sale of the
Pacific Zonda. An arbitration tribunal in London, England (the
“Tribunal”) awarded SHI approximately $320 million with respect to
its claims against PDVIII and PDSI. The award does not include
approximately $100 million in interest and costs sought by SHI, on
which the Tribunal reserved making a decision to a later date.
As previously disclosed, in connection with the Company’s now
concluded Chapter 11 proceedings, PDVIII and PDSI (the “Zonda
Debtors”) filed a separate plan of reorganization (the “Zonda
Plan”) under Chapter 11 of the U.S. Bankruptcy Code in the United
States Bankruptcy Court for the Southern District of New York,
which was confirmed on January 30, 2019. Once the Tribunal’s award
becomes final and unappealable, the Company expects the Zonda
Debtors, which have approximately $4.5 million in cash and no other
material assets, will be liquidated in accordance with the terms of
the Zonda Plan.
The Company does not expect the Tribunal’s decision to have any
material adverse effect on its operations or to cause any default
under any of its material contracts including under the indentures
for its outstanding notes. As a result of the Tribunal’s decision,
the Company expects to recognize a loss of approximately $225
million during the fourth quarter of 2019, primarily related to the
elimination of the Zonda receivable on the balance sheet.
PDVIII and PDSI are currently considering whether to seek
permission to appeal and are exploring all available legal
remedies. Under the rules governing the arbitration proceedings,
PDVIII and PDSI have no automatic right to appeal and the grounds
on which the High Court in London may grant permission to appeal
are limited. PDVIII and PDSI must seek permission to appeal no
later than 28 days from the date of the award, or by February 12,
2020.
Pacific Drilling CEO Bernie Wolford commented, “The Company is
surprised and disappointed by the Tribunal’s decision. However,
this outcome will not impact our commitment and ability to continue
to deliver to our customers the highest level of deepwater drilling
services in our industry.”
About Pacific Drilling
With its best-in-class drillships and highly experienced team,
Pacific Drilling is committed to exceeding our customers’
expectations by delivering the safest, most efficient and reliable
deepwater drilling services in the industry. Pacific Drilling’s
fleet of seven drillships represents one of the youngest and most
technologically advanced fleets in the world. Pacific Drilling has
principal offices in Luxembourg and Houston. For more information
about Pacific Drilling, including our current Fleet Status, please
visit our website at www.pacificdrilling.com.
Forward-Looking
Statements
Certain statements and information contained in this press
release constitute “forward-looking statements” within the meaning
of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995, and are generally identifiable by their use of
words such as “anticipate,” “believe,” “could,” “estimate,”
“expect,” “forecast,” “intend,” “our ability to,” “may,” “plan,”
“potential,” “predict,” “project,” “projected,” “should,” “will,”
“would”, or other similar words which are not generally historical
in nature. The forward-looking statements speak only as of the date
hereof, and we undertake no obligation to publicly update or revise
any forward-looking statements after the date they are made,
whether as a result of new information, future events or
otherwise.
Our forward-looking statements express our current expectations
or forecasts of possible future results or events, and include
statements regarding the possibility of the Company’s appeal or
other legal remedies and the potential timing and outcome of those
actions, expectations regarding the Zonda Debtors’ bankruptcy
proceedings, and expectations regarding the impact of the
Tribunal’s decision on the Company’s operations, relationships,
financial position, results of operations and liquidity.
Although we believe that the assumptions and expectations
reflected in our forward-looking statements are reasonable and made
in good faith, these statements are not guarantees, and actual
future results may differ materially due to a variety of factors.
These statements are subject to a number of risks and uncertainties
and are based on a number of judgments and assumptions as of the
date such statements are made about future events, many of which
are beyond our control. Actual events and results may differ
materially from those anticipated, estimated, projected or implied
by us in such statements due to a variety of factors, including if
one or more of these risks or uncertainties materialize, or if our
underlying assumptions prove incorrect.
Important factors that could cause actual results to differ
materially from our expectations include: the risks of litigation
in foreign jurisdictions and delays caused by third parties in
connection with such litigation, the outcome of the Zonda Debtors’
bankruptcy proceedings and any actions that SHI or others may take
in the bankruptcy or other proceedings against the Company and its
subsidiaries, and the other risk factors described in our 2018
Annual Report on Form 20-F filed with the Securities and Exchange
Commission on March 12, 2019 and our Reports on Form 6-K. These
documents are available through our website at
www.pacificdrilling.com or through the SEC’s website at
www.sec.gov.
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version on businesswire.com: https://www.businesswire.com/news/home/20200115005770/en/
Investor Contact: James Harris Pacific Drilling S.A. +713 334
6662 Investor@pacificdrilling.com
Media Contact: Amy L. Roddy Pacific Drilling S.A. +713 334 6662
Media@pacificdrilling.com
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