Seadrill Jumps as Debt Talks Progress and Dibowitz Named CEOBy
CCO Anton Dibowitz to succeed Per Wullf as CEO in July
New refinancing proposal on table, but dilution risk repeated
Seadrill Ltd. jumped as much as 26 percent as the offshore driller controlled by John Fredriksen said it’s getting closer to a solution to restructure the industry’s heaviest debt load and that it’s promoting a company insider to chief executive officer.
Seadrill rose the most since April 11 and was up 19 percent at 5.60 kroner a share as of 1:44 p.m. in Oslo. About 4.9 million shares have traded so far, more than 93 percent above the daily average over the past three months.
Seadrill has been working for well over a year to restructure a wall of debt incurred before crude prices started collapsing in 2014, abruptly closing a decade-long boom for the oil-service industry. The offshore driller, once the crown jewel of Fredriksen’s business empire, last month pushed back a deadline for talks with shareholders and creditors to the end of July.
It repeated warnings in its first-quarter report on Wednesday that all stakeholders would probably suffer steep losses in any restructuring deal, which will likely involve some sort of court proceedings. But it also said it has received a proposal from third-party and related-party investors and is currently in “advanced discussions” with those investors and secured lenders. It’s also in talks with some bondholders, who have become restricted again.
“We are getting there,” CEO Per Wullf said in a phone interview. “I’m not in doubt we will find a solution. Whether we have to use courts is very much depending on how many we get on board.”
Fredriksen, Seadrill’s chairman and biggest owner, is “instrumental” in the process, Wullf said, declining to provide details on the billionaire’s exact role or proposed participation. The new proposal includes about $1 billion in new capital, as indicated by the company earlier, and the conversion of bonds, the outgoing CEO said.
Wullf will be succeeded on July 1 by Chief Commercial Officer Anton Dibowitz, in line with a succession plan set in motion last year, Seadrill said in a separate statement. Wullf, who said he was stepping down to reduce his workload and spend more time in his home country of Denmark, will remain a member of the board.
“I have a very good relationship with John, and that will continue,” he said, referring to Fredriksen. “When we are getting closer to having a restructuring in place, we want to do the change of leadership, because the new CEO needs to be involved and do the final restructuring.”
Dibowitz, a U.S. citizen who joined Seadrill in 2007, has run the day-to-day business administration of the company since June 2016 as executive vice president.
“Anton has a strong industry track record,” Fredriksen said in the statement. “We are confident that this succession plan provides Seadrill with the right combination of continuity and stability as the company works to complete its financial restructuring aimed at building a bridge to a recovery and achieving a sustainable capital structure.”
Earnings before interest, tax, depreciation and amortization fell to $291 million in the first quarter from $528 million a year earlier. That beat the average forecast of $255 million in a Bloomberg survey of 12 analysts and the company’s own guidance of about $250 million.
“A solid cost beat contributed to the positive deviation,” Magnus Olsvik, an analyst at Swedbank AB, said in a note to clients.
The offshore-rig market is now “trawling along the bottom” as oil companies seek to lock in low rates in increasingly longer contracts, Dibowitz said in the same telephone interview.
“The rest of 2017 and 2018 are going to be challenging,” he said. Activity will continue to rise but day rates for rigs will probably not recover in earnest until “2019 and beyond,” he added.