HAMILTON, Bermuda, July 11, 2023 /PRNewswire/ -- Seadrill Limited
("Seadrill" or the "Company") (NYSE: SDRL) (OSE: SDRL) provides
further information regarding the Revolving Credit Facility (as
defined herein) and certain other information being delivered to
potential investors in connection with the offering of the Notes
(as defined herein).
Revolving Credit Agreement
On July 11, 2023, Seadrill and its
wholly owned subsidiary Seadrill Finance Limited ("Seadrill
Finance"), an exempted company limited by shares incorporated under
the laws of Bermuda, entered into
the Senior Secured Revolving Credit Agreement (the "New Credit
Agreement") with certain lenders and issuing banks party thereto,
J.P. Morgan SE as the administrative agent for the lenders, and
GLAS Trust Company LLC as the common security agent. Subject to the
conditions set forth below, the New Credit Agreement will establish
a revolving credit facility for Seadrill Finance, as the borrower,
with commitments for revolving borrowings of $225.0 million, a letter of credit sublimit of
$50.0 million, and an accordion
feature of up to $100.0 million (the
"Revolving Credit Facility").
All obligations of Seadrill Finance under the New Credit Agreement,
certain cash management obligations, certain letter of credit
obligations, and certain swap obligations are unconditionally
guaranteed, on a joint and several basis, by Seadrill and certain
of its direct and indirect subsidiaries (together with Seadrill
Finance and Seadrill, the "Credit Parties"). All such obligations,
including the guarantees of the Revolving Credit Facility, are
secured by senior priority liens on substantially all assets of,
and the equity interests in, each Credit Party (to the extent owned
by another Credit Party), including certain rigs owned by the
Credit Parties as of the effective date of the New Credit Agreement
(the "Effective Date"), along with certain other rigs in the future
such that rigs constituting part of the collateral shall generate
at least 80% of the revenue of all rigs (other than certain
non-core rigs) owned by Seadrill and its restricted subsidiaries
and the ratio of the aggregate rig value of the collateral rigs to
the commitments under the Revolving Credit Facility is at least
3.50 to 1.00, in each case, subject to certain exceptions and
limitations described in the New Credit Agreement.
The loans outstanding under the Revolving Credit Facility bear
interest at a rate per annum equal to the applicable margin plus,
at Seadrill Finance's option, either: (i) the Term SOFR (as defined
in the New Credit Agreement) plus 0.10%; or (ii) the Daily Simple
SOFR (as defined in the New Credit Agreement) plus 0.10%. For both
the Term SOFR loans and Daily Simple SOFR loans, the applicable
margin is initially 2.75% per annum and may vary based on
Seadrill's Credit Ratings (as defined in the Credit Agreement),
from 2.50% to 3.50% per annum.
Seadrill Finance is required to pay a quarterly commitment fee to
each lender under the Revolving Credit Facility, which accrues at a
rate per annum equal to (i) 0.50% on the average daily unused
portion of such lender's commitments under the Revolving Credit
Facility during the period from and including the Effective Date to
and including the third anniversary of the Effective Date; (ii) a
rate per annum equal to 0.75% during the period from the third
anniversary of the Effective Date to and including the fourth
anniversary of the Effective Date; and (iii) thereafter, a rate per
annum equal to 1.00%. Seadrill Finance is also required to pay
customary letter of credit and fronting fees.
Borrowings under the New Credit Agreement may be used for working
capital and other general corporate purposes. The Effective Date
and availability of borrowings under the Revolving Credit Facility
are subject to the satisfaction of certain conditions, including
(i) the issuance of the senior secured second lien notes (the
"Notes") that will be offered and sold pursuant to Rule 144A and
Regulation S promulgated under the Securities Act of 1933, as
amended (the "Securities Act"); (ii) the redemption or discharge of
all of the obligations under the existing Super Senior Term and
Revolving Facilities Agreement dated February 22, 2022 and the existing Senior Secured
Credit Facility Agreement dated February 22,
2022; and (iii) that, after giving effect to any such
borrowings and the application of the proceeds thereof, the
aggregate amount of Available Cash (as defined in the New Credit
Agreement) would not exceed $250
million.
Mandatory prepayments and, under certain circumstances, commitment
reductions are required under the Revolving Credit Facility in
connection with certain asset sales, asset swaps, and events of
loss (subject to reinvestment rights if no event of default
exists). Available Cash in excess of $250
million at the end of any month must also be applied to
prepay loans (without a commitment reduction). The loans under the
Revolving Credit Facility may be voluntarily prepaid, and the
commitments thereunder voluntarily terminated or reduced, by
Seadrill Finance at any time without premium or penalty, other than
customary breakage costs.
The New Credit Agreement obligates Seadrill and its restricted
subsidiaries to comply with the following financial
covenants:
- as of the last day of each fiscal quarter, the Interest
Coverage Ratio (as defined in the New Credit Agreement) is not
permitted to be less than 2.50 to 1.00; and
- as of the last day of each fiscal quarter, the Consolidated
Total Net Leverage Ratio is not permitted to be greater than 3.00
to 1.00.
The New Credit Agreement contains negative covenants that limit,
among other things, the Company's ability and the ability of its
restricted subsidiaries to: (i) incur, assume, or guarantee
additional indebtedness; (ii) pay dividends or distributions on
capital stock or redeem or repurchase capital stock (other than
with the proceeds of certain sales of non-core assets); (iii) make
investments; (iv) repay, redeem or amend certain indebtedness; (v)
sell stock of its subsidiaries; (vi) transfer or sell assets; (vii)
create, incur, or assume liens; (viii) enter into transactions with
controlling affiliates; (ix) merge or consolidate with or into any
other person or undergo certain other fundamental changes; and (x)
enter into certain burdensome agreements. These negative covenants
are subject to a number of important limitations and
exceptions.
Additionally, the New Credit Agreement contains other covenants,
representations and warranties, and events of default that Seadrill
considers customary for this type of financing. Events of default,
include, among other things: nonpayment of principal or interest;
breach of covenants; breach of representations and warranties;
failure to pay final judgments in excess of a specified threshold;
failure of a guarantee to remain in effect; failure of a security
document to create an effective security interest in collateral;
bankruptcy and insolvency events; cross-default to other material
indebtedness; and a change of control. The occurrence of any event
of default under the New Credit Agreement would permit all
obligations under the Revolving Credit Facility to be declared due
and payable immediately and all commitments thereunder to be
terminated. The occurrence of a payment default under the New
Credit Agreement would, in general, increase the applicable
interest rate under the Revolving Credit Facility by 2.0% per
annum.
The foregoing description of the New Credit Agreement is qualified
in its entirety by the full text of the New Credit Agreement, which
is attached hereto.
Certain other information
In connection with the offering of the Notes, the Company is
providing the information below and attached hereto. The
information below and attached hereto is excerpted from information
being delivered to potential investors in connection with the
offering of the Notes.
Approach to capital allocation
Seadrill has developed capital allocation principles and is
installing a capital allocation framework based on those principles
which will be designed to prioritize a conservative capital
structure and liquidity position, focused capital investment in its
fleet, and returns to its shareholders. Within this framework, we
intend to maintain a net leverage target of not more than 1.0x
under current market conditions, with a maximum through-cycle net
leverage target of not more than 2.0x. We also intend to maintain a
strong liquidity position in order to provide resilience even in a
downturn scenario by establishing a target minimum cash-on-hand of
$250 million. Further, we intend to
evaluate the potential for accretive additions in our core asset
categories. So long as we are able to meet our net leverage and
liquidity targets on a forward-looking basis, as well as comply
with our credit facility covenant requirements, we would seek to
provide a return to our shareholders of at least 50% of Free Cash
Flow (defined as cash flows from operating activities minus capital
expenditures) in the form of share repurchases and/or dividends. We
will consider additional returns to shareholders from the proceeds
of any asset sales in the absence of identified, accretive
opportunities. Dividends and share repurchases will be authorized
and determined by our Board of Directors in its sole discretion and
depend upon a number of factors, including those described above,
our future prospects, market trend evaluation and such other
factors as our Board of Directors may deem relevant. We can provide
no assurance that we will pay dividends or make share repurchases
in accordance with our capital allocation framework and our
shareholder return goals or at all, nor can we provide assurance
regarding our Free Cash Flow measurement periods or potential
dividend or repurchase dates.
The information contained in this press release, including
attachments hereto, is neither an offer to sell nor a solicitation
of an offer to buy the securities described herein, nor shall there
be any sale of these securities in any jurisdiction in which such
an offer, solicitation or sale would be unlawful absent
registration or an applicable exemption from the registration
requirements of the securities laws of any such jurisdiction. The
securities to be offered have not been registered under the
Securities Act, any state securities laws or any foreign
jurisdiction. The Company plans to offer and sell the
securities only to persons reasonably believed to be qualified
institutional buyers pursuant to Rule 144A under the Securities Act
and to persons outside the United
States pursuant to Regulation S under the Securities
Act.
This announcement is considered to contain inside information as
defined in article 7 of the EU Market Abuse Regulation, is subject
to disclosure requirements pursuant to section 5-12 of the
Norwegian Securities Trading Act and was made public by
Simon Woods at Hawthorn Advisors on
the date and time hereof.
Contact Information
For additional information, visit www.seadrill.com.
Benjamin Wiseman
Investor Relations
T: +44 (0)7867139312
E: benjamin.wiseman@seadrill.com
About Seadrill
Seadrill is a leading offshore drilling contractor utilizing
advanced technology to unlock oil and gas resources for clients
across harsh and benign locations around the globe. Seadrill's
high-quality, technologically-advanced fleet spans all asset
classes allowing its experienced crews to conduct operations across
geographies, from shallow to ultra-deepwater environments.
Forward-Looking Statements
This communication includes forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. All statements other than statements of historical
facts included in this communication, including those regarding the
size of the offering of notes, the use of proceeds therefrom, the
closing and availability of borrowings under the New Credit
Agreement, our target leverage and liquidity, shareholder returns
and our capital allocation framework, and statements about the
Company's plans, strategies, business prospects, changes and trends
in its business and the markets in which it operates are
forward-looking statements. These forward-looking statements can
often, but not necessarily, be identified by the use of
forward-looking terminology, including the terms "assumes",
"projects", "forecasts", "estimates", "expects", "anticipates",
"believes", "plans", "intends", "may", "might", "will", "would",
"can", "could", "should" or, in each case, their negative, or other
variations or comparable terminology. These statements are based on
management's current plans, expectations, assumptions and beliefs
concerning future events impacting the Company and therefore
involve a number of risks, uncertainties and assumptions that could
cause actual results to differ materially from those expressed or
implied in the forward-looking statements, which speak only as of
the date of this communication. Important factors that could cause
actual results to differ materially from those in the
forward-looking statements include, but are not limited to, the
factors described from time to time in the reports filed or
furnished by us with the U.S. Securities and Exchange Commission
("SEC"). Consequently, no forward-looking statement can be
guaranteed. When considering these forward-looking statements, you
should also keep in mind the risks described from time to time in
the Company's filings with the SEC, including its annual report on
Form 20-F for the year ended December 31,
2022, filed with the SEC on April 19,
2023, (File No. 001-39327) and subsequent filings.
The Company undertakes no obligation to update any forward-looking
statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it
is not possible for us to predict all of these factors. Further,
the Company cannot assess the impact of each such factors on its
business or the extent to which any factor, or combination of
factors, may cause actual results to be materially different from
those contained in any forward-looking statement.
CONTACT:
seadrill@hawthornadvisors.com
The following files are available for download:
https://mb.cision.com/Public/18925/3803494/a49aa7b2c669a45d.pdf
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New Credit
Agreement
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https://mb.cision.com/Public/18925/3803494/a826b78d1484a3e1.pdf
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Certain Excerpted
Information Regarding The Offering Of The Notes
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