Seadrill Said to Line Up Houlihan, Morgan Stanley for Debt Talks

(Bloomberg) -- Seadrill Ltd., the offshore driller with the biggest debtload, hired Houlihan Lokey Inc. and Morgan Stanley to advise it in negotiations on restructuring $11 billion of loans and bonds, two people familiar with the matter said.

Bank lenders to the company formed a committee this month to lead the talks and appointed adviser Lazard Ltd. and law firm White & Case, said the people, who asked not to be identified because the information is private.

Offshore drillers are struggling to repay debt as competition and reduced spending by oil companies hurt profits. Falling demand for rig services is forecast to reduce sales at the world’s largest offshore contractors by 25 percent this year and at least 10 percent in 2017, according to Bloomberg Intelligence analyst Andrew Cosgrove.

Spokesmen at Houlihan Lokey, Morgan Stanley and White & Case declined to comment on the appointments. Officials at Seadrill and Lazard didn’t immediately respond to e-mails and calls seeking comment.

Seadrill has $2.6 billion of unsecured bonds and $8.4 billion of bank facilities. Almost $3.5 billion of debt is due by the end of next year, according to data compiled by Bloomberg. The company’s $948 million of bonds due September 2017 are quoted at about 45 cents on the dollar, the data show.

The company, controlled by billionaire John Fredriksen, aims to have a plan agreed with bondholders and banks by the end of June, Chief Executive Officer Per Wullf said in an interview on Feb. 26. Getting to a deal will be complex, in part because Seadrill has more than 40 bank creditors across a dozen syndicates, Wullf said.

The restructuring may include a debt-for-equity swap, Bloomberg Intelligence’s Cosgrove wrote on March 24. Analysts including Janne Kvernland of Nordea Bank AB say the plan may involve the issue of at least $1 billion in new equity.

With assistance from Mikael Holter. To contact the reporters on this story: Luca Casiraghi in London at lcasiraghi@bloomberg.net ;Dinesh Nair in London at dnair5@bloomberg.net ;Steven Church in Wilmington, Delaware at schurch3@bloomberg.net To contact the editors responsible for this story: Shelley Smith at ssmith118@bloomberg.net Mark McCord, Abigail Moses.

Copyright 2016 Bloomberg News.

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