Offshore driller Noble enters Chapter 11

October 2020 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

October 2020 Issue

Due to a significant crash in crude oil prices which made undersea wells too expensive to operate, offshore drilling contractor Noble Corporation plc has filed for Chapter 11 bankruptcy in an attempt to restructure its operations, deleverage its balance sheet and position itself for long-term growth.

The Chapter 11 filing process has been undertaken in order to implement a restructuring agreement – entered into alongside two ad hoc groups of the largest holders of its $3.4bn debt – that will cancel and exchange the debt for new equity in the reorganised company.

To support the deleveraging transaction, Noble’s major bondholders have agreed to invest $200m of new capital in the form of new second lien notes. In addition, the company is expected to emerge with an enhanced liquidity position supported by a new $675m secured revolving credit facility to be provided by its current syndicate of revolving credit facility lenders, with JPMorgan Chase Bank, N.A. as administrative agent.

The significant reduction of its debt and annual interest expense, combined with a strong liquidity position, will enable Noble to reorient itself toward future growth and value creation for all stakeholders. Furthermore, the company has sufficient capital to fund its worldwide operations and does not require additional post-petition financing.

In addition, 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.

As a result of these measures, Noble expects to emerge from Chapter 11 before the end of 2020.

“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 coronavirus (COVID-19) pandemic,” said Robert Eifler, president and chief executive of Noble. “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.”

A leading offshore drilling contractor for the oil and gas industry, Noble owns and operates one of the most modern, versatile and technically advanced fleets in the offshore drilling industry. The company performs, through its subsidiaries, contract drilling services with a fleet of 24 offshore drilling units, consisting of 12 drillships and semisubmersibles and 12 jackups, focused largely on ultra-deepwater and high-specification jackup drilling opportunities in both established and emerging regions worldwide.

Serving as legal counsel to Noble is Skadden, Arps, Slate, Meagher & Flom LLP, with Evercore as financial adviser and AlixPartners LLP as operational adviser. Serving as local legal counsel is Porter Hedges LLP, with EPIQ Restructuring Services LLC as administrative agent. In addition, Simpson Thacher & Bartlett LLP is serving as legal counsel and PJT Partners is serving as financial adviser to JP Morgan.

Mr Eifler concluded: “Our improved balance sheet and liquidity position will enable us to further invest in our assets, customer relationships and our people. We remain committed to the world class operational excellence, safety and environmental stewardship that defines Noble.”

Fraser Tennant