Transocean's $1.5 Billion Restructuring Survives Hedge-Fund Lawsuit
18 December 2020 - 5:02AM
Dow Jones News
By Andrew Scurria
A federal judge upheld a $1.5 billion debt restructuring by
offshore-drilling contractor Transocean Ltd., ruling against a
hedge-fund bondholder that claimed it was treated unfairly as the
company took steps to survive a turbulent oil market.
Judge George B. Daniels of the U.S. District Court in New York
rejected efforts by Whitebox Advisors LLC to call a debt default
against Transocean during a painful period for deep-water drilling
that has sent several peer companies to bankruptcy.
Transocean has stayed afloat in part through a September bond
exchange covering roughly $1.5 billion in debt that shaved some
$826 million from the company's balance sheet. Whitebox and Pacific
Investment Management Co. held out, objecting to the exchange and
saying their claims against some Transocean assets had been
weakened in violation of debt contracts.
In September, they told Transocean they believed the
restructuring amounted to a default and sued the company. The
default notice gave the company 90 days, until Dec. 1, to resolve
the allegation or else risk accelerated bond repayments, the loss
of bank credit and a forced bankruptcy filing.
The company denied it was in default and called the allegations
baseless. Still, with the Dec. 1 deadline looming, Transocean
unwound some asset-shifting maneuvers that Whitebox had complained
about. The company said that resolved the alleged default before
the cure period lapsed and investors could take action.
On Thursday, the judge said no default had occurred. Whitebox
didn't immediately respond to a request for comment.
Transocean isn't alone among offshore drilling contractors in
facing severe financial strains. Several of the Switzerland-based
company's competitors have restructured their balance sheets in
recent months, slammed by volatile crude prices and the coronavirus
pandemic's impact on global oil demand.
The world's largest deep-water rig owner, Transocean is on more
solid footing than U.S. offshore contractor Diamond Offshore
Drilling Inc., the U.K.'s Noble Corp. and Valaris PLC and
Luxembourg-based Pacific Drilling SA, all of which have filed for
bankruptcy since April.
Transocean had accused Whitebox in court papers of waging a
campaign to force an unnecessary bankruptcy in which bondholders
like itself could take equity control.
Even before the pandemic, a sluggish oil market had idled many
offshore fleets as advanced techniques for tapping deep oil
deposits on land led to record oil production in the U.S.,
diverting investment interest from more-complex drilling
offshore.
Write to Andrew Scurria at andrew.scurria@wsj.com
(END) Dow Jones Newswires
December 17, 2020 12:47 ET (17:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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