John Fredriksen-backed Seadrill is scrapping its New York listing and aiming for a second refinancing in two years as losses mount.
The drillship and rig owner said on Tuesday that it will retain its Oslo listing but shift to the over the counter (OTC) market.
Seadrill took an impairment of $1.2bn on its drillships, leading to a net loss of $1.56bn in the first quarter, up from $296m in 2019.
Revenue rose to $321m, from $302m a year earlier. Adjusted Ebitda was $55m, representing a 17.1% margin.
The offshore contractor said it had faced "significant" market challenges arising from the sharp decline in the oil price, plus operational issues due to the coronavirus pandemic.
In 2018, Seadrill emerged from a Chapter 11 restructuring. Fredriksen stepped down as chairman in November last year. He has a 27% stake.
Legal advice sought
The company now has $7.4bn in debt and has been working with creditors on an interim financing package since the end of 2019, with a view to buying time for a longer-term deal.
Seadrill has gained substantial support, it said, but needs 100% agreement from 43 institutions for some of the amendments proposed.
"Recent market uncertainties have prevented a coalescing of views," the company added. "As a consequence, Seadrill has decided not to proceed with the bank consent and has retained financial and legal advisors to prepare for a comprehensive restructuring of the balance sheet."
With $1.2bn cash on hand, Seadrill believes it has enough liquidity to complete a restructuring.
"However, until such time that an agreement is reached to restructure our borrowing commitments, substantial doubt remains over ability to continue as a going concern," the company added.
Fredriksen's shipowning company SFL Corp revealed last month it is in talks over reducing bareboat charter rates for three of its drillships operated by Seadrill. These have a charter backlog of $900m.
Units need to be scrapped
Chief executive Anton Dibowitz paid tribute to the efforts of staff to keep working through lcokdowns, but said some "will be leaving us" as the company looks to lower costs.
"This industry has two fundamental challenges which are emphasised by recent events - there are too many rigs carrying too much debt," he added.
"In the quarter we took an impairment of $1.2bn as we recognise, along with others in the sector, that a number of our assets are increasingly unlikely to return to the market and need to be scrapped."
He predicted debt being converted into equity across the drilling industry. Seadrill will be included in this, with the company forecasting a substantial swap of its liabilities into stock.
The company said on 26 March it had received written notice from the New York Stock Exchange that it was not in compliance with the $1 share price requirement.
Seadrill had intended to regain compliance, but now feels that due to the "macro environment", and "taking into account other factors associated with maintaining a NYSE listing", a delisting is in the best interests of the company.
The shares will cease trading around 19 June, Seadrill said.
The company is expecting its stock to trade on the Oslo over the counter (OTC) market, "if one or more brokers chooses to make a market for our common shares," Seadrill added.
"The company does not expect the transition to the OTC to affect business operations."
Seadrill added $77m in charter backlog in the quarter, bringing the total to $2.5bn.
