Noble Corp. (NE) - Get Report on Friday filed a petition under Chapter 11 of U.S. bankruptcy law, including a plan to erase the offshore drilling contractor’s $3.4 billion bond debt through a swap for new equity.
The plunge in oil prices this year has hammered the company, making undersea oil wells unaffordable. Noble is one of the world’s biggest owners of offshore rigs. The coronavirus pandemic has crunched the energy industry more broadly, causing a worldwide slump in demand for oil.
The London company’s major bondholders have agreed to invest $200 million of new capital in the form of new second-lien notes, it said.
In addition, it expects to garner a $675 million secured revolving loan from its current syndicate of revolving-credit lenders, with JPMorgan Chase as administrative agent.
“The significant reduction of debt and annual interest expense, combined with a strong liquidity position, will enable the company to reorient itself toward future growth,” it said.
“Noble plans to continue to operate as normal and without interruption for the duration of the restructuring and will continue to pay employee wages and health and welfare benefits as well as vendors in the normal course.”
Chief Executive Robert Eifler, in a statement, explained the company’s plight.
"Along with many other businesses in our industry, Noble has been affected by the severe downturn in commodity prices, which has been compounded by the covid-19 pandemic,” he said.
“After many months exploring our strategic options, we concluded that a substantial deleveraging transaction implemented through a Chapter 11 filing, supported by our largest creditors, provides the best outcome for Noble and our stakeholders.”
Noble filed the petition and plan in U.S. Bankruptcy Court for the Southern District of Texas. The company expects the plan to be confirmed in the fall and it hopes to exit Chapter 11 proceedings this year.
Trading in Noble shares was halted after Thursday’s close of 21 cents, down 9.5%. The stock has slumped 83% year to date.