Replies to post #1952 on Seadrill Ltd (SDRL)

[MisterEC]

Why would you buy this?

Seadrill Explains Why Its Shares Have No Fundamental Value

Summary

Seadrill and Seadrill's unsecured creditors file objections to the appointment of an equity committee.

In its explanation, Seadrill shows liquidation value analysis for unsecured creditors.

In case unsecured creditors vote 'no', they will have a just 5% recovery.

The only hope for shareholders to receive anything is a positive vote from unsecured creditors who lose more if they decline the current plan.

Seadrill's (SDRL) unsecured creditors and the company itself have recently filed objections (docket 289,290) to the motion for appointment of an official equity committee. The legal part of this story has already been well covered by fellow contributor WYCO Researcher. In this article, I want to focus on the financial part of Seadrill's bankruptcy, as Seadrill has provided the preliminary liquidation analysis as well as details on the post-filing marketing process.

[MisterEC]

Seadrill Explains Why Its Shares Have No Fundamental Value
Seadrill Explains Why Its Shares Have No Fundamental Value

Seadrill carries too much bank debt to be attractive to any potential bidder.

The case for equity being completely out of money is very straightforward. The value of unsecured claims being equitized is much higher than the value of Seadrill's post-reorganization equity. This is true both in the example above, where the company uses the value of Hemen and Centerbridge capital infusion to determine the value of 100% equity, and in my calculation, that suggests that the price target for Seadrill shares is just 5 cents.

The current shares may just GO AWAY after the bankruptcy. Unless the wealthy bond holders want to pitty the dead dogs who did not do the proper DD before they bought.