Diamond Offshore Drilling entered into a plan support agreement with holders of more than 70% of each of its senior unsecured notes and revolving credit facility loans regarding a financial restructuring transaction that will deleverage the company’s balance sheet.
The plan support agreement outlines a plan for deleveraging the company’s balance sheet through the equitization of its senior unsecured notes, resulting in a reduction of more than $2.1 billion of funded indebtedness. In addition, certain holders of senior unsecured notes have agreed to invest up to $110 million of new capital in the form of first lien, last out exit notes, while certain holders of revolving credit facility loans have agreed to provide exit financing facilities in the form of (a) a $300 million to $400 million first lien, first out revolving credit facility and (b) a $100 million to $200 million first lien, last out term loan facility.
Proceeds of the new exit financing facilities will fund plan distributions and provide liquidity for Diamond Offshore Drilling to operate after emergence.
“The comprehensive plan support agreement we signed today raises new capital and is overwhelmingly supported by our banks and our bondholders. We look forward to emerging with a stronger balance sheet, significantly less debt and increased financial flexibility. This agreement is a testament to the market’s belief in Diamond and our world class team. With our improved capital structure, we will be in a strong position to capitalize on market opportunities as they emerge,” Marc Edwards, chairman, president and CEO of Diamond Offshore Drilling, said.
As previously announced in April, Diamond Offshore Drilling and certain of its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
Alvarez & Marsal is serving as Diamond Offshore Drilling’s restructuring advisor in the company’s Chapter 11 plan of reorganization. Lazard Frères & Co. is serving as financial advisor to the company, while Paul, Weiss, Rifkind, Wharton & Garrison and Porter Hedges are acting as the company’s legal counsel.
