A proposal by Seadrill to restructure its debt could wipe out all but a small fraction of John Fredriksen's stake in the drillship and rig owner.
The New York-listed company has proposed a new plan that would reduce bank debt from $5.6bn to $750m. In turn, the creditors would get a 99% stake in Seadrill.
The 85% debt haircut was revealed in a restructuring proposal filed with a US bankruptcy court in Houston as part of the company's Chapter 11 proceedings.
If the banks agree to give up most of the debt and take over 99% of Seadrill, they will recoup between 27% and 31% of their claims.
But Norwegian financial newspaper Finansavisen reported that Fredriksen, the company's leading shareholder with a 27.2% stake, will be left with a fraction of 1% of the former drilling giant that he once controlled.
The proposal comes amid major disagreements between the banks and hedge funds that have been backing Seadrill.
According to Finansavisen, Seadrill is making efforts to make major creditors agree a solution.
The creditors are made up of traditional banks and funds that have invested in the company's debt at a discount. The parties are understood to have come closer to a solution in the last few days.
Company chairman Ole Rodland told Finansavisen that if the lenders agree on the proposed financing, and they do not want to increase their exposure in the company, it is natural to offer the right to contribute fresh capital to other investors.
He declined to give further comments.
A solution will not imply that all banks receive the same stake, as there are huge variations between the different loans and the rigs that back them.
The company proposes to inject $300m in fresh capital as part of the solution.
The US-listed drilling company's shares were trading at just $0.22 per share before Easter, compared to an equivalent of more than $10,000 per share in June 2014.
Last year, Seadrill reported a $4.66bn loss.
