Seadrill Ltd (SDRL)

[MisterEC]

Is there any hope for the puppies?

Seadrill Bankruptcy - Discussion Of Frequently Asked Questions

Why would John Fredriksen accept his current roughly 23.5% stake in Seadrill being potentially wiped out under the plan of reorganization?

His company, Hemen Holdings, has committed to hundreds of millions of dollars of both debt and equity funding to the new Seadrill in addition to exchanging some bonds into equity. In return, Hemen Holdings will receive new equity providing Fredriksen with roughly the same stake in the restructured company.
(But he is a billionur, you think he will let the price fall under a buck?)

What will happen to the stock in case of delisting?

The shares will likely commence trading on the over-the-counter market as already evidenced by the company's subsidiary North Atlantic Drilling (OTCPK:NADLQ) which was delisted by the NYSE soon after the company filed for bankruptcy alongside Seadrill due to current shareholders expected to be wiped out.

When will Seadrill emerge from bankruptcy?

The company's plan currently anticipates to emerge from bankruptcy within the next 9-11 months.

What will be the equity valuation of the restructured company?


Based on the implied equity valuation of $800 million discussed above, theoretical downside in the shares would calculate to more than 90% from current levels.


As an example:

You currently own 100,000 shares of Seadrill common stock.
(assumed) equity value, your recovery would calculate to $4,000 compared to a value of $33,500 as of yesterday's close.

Moreover, shortsellers might be inclined to cover positions given elevated borrowing fees and sky-high margin requirements threatening to negate additional downside potential in the share price over time.

I am holding a long position at a substantial loss. Should I sell or still bet on an improved recovery for equityholders?

You should consider taking your losses and moving on as an improved recovery for shareholders looks unlikely at this point. In fact, there's a great chance that equityholders will see no recovery at all. If lucky, you might be able to dispose of your shares into a momentum-driven run as evidenced today.