Halister News

(Bloomberg) -- Long-term upside in Seadrill Ltd.’s shares improve the outlook of recovery for Seadrill bondholders, Clearview Trading Advisors,analyst William Popper wrote in a report published Monday, recommending a ‘buy’ for Seadrill bonds.

• "Using the plan projections to value the company’s new shares, we think SDRL’s notes are fairly priced. However, we think reorganized SDRL’s shares have considerable long-term potential if offshore drilling recovers"
• Company has proposed Chapter 11 reorganization plan, backed by $1b investment from Hemen Holding Ltd. and Centerbridge Partners
  • "Under the current transaction, the new equity and secured lenders seem to be getting a substantial windfall. In addition, it keeps the Hemen ownership group in control, without paying a control premium."
  • "Seadrill unsecured creditors will receive 14.3% of the new equity after dilution. They’re getting a poor deal which doesn’t mean they will get a much better one"
• Seadrill has a 90 day "go-shop" period that allows bondholders to search for a better deal. A group of noteholders have also hired financial and legal counsel to fight the restructuring plan
• Bondholders could see an 11 to 13 cent recovery based on receiving 14.3% of the equity, and a 13 to 16 cents if they can challenge the distribution to Seadrill shareholders: Popper
  • Bondholders could also add another 1 to 2 points of recoveries if by subscribing to an equity rights offering for 3.0% of the shares at the $800m valuation: Popper
• "There is a lot to be gained if bondholders are successful in getting a better deal."
• NOTE: Seadrill Unsecured Bondholders ’Stuck’ With Chapter 11 Plan: BI

To contact the reporter on this story: Robert Lee in New York at rlee495@bloomberg.net To contact the editors responsible for this story: James Crombie at jcrombie8@bloomberg.net Faris Khan