Offshore-Rig Operator Noble Files for Bankruptcy
July 31 2020 - 2:04PM
Dow Jones News
By Patrick Fitzgerald
Noble Corp., an operator of offshore oil-and-gas drilling rigs,
filed for bankruptcy Friday, the latest victim of falling oil
demand as the coronavirus pandemic ravages the global economy.
London-based Noble and more than three dozen affiliates sought
chapter 11 protection in U.S. Bankruptcy Court in Houston after
reaching a deal with bondholders on a debt-for-equity swap that
wipes out $3.4 billion in debt.
Noble has carried a heavy debt load for years, but business has
dried up since the Covid-19 pandemic led to collapsing demand for
oil and gas. Earlier this month, the company missed a $15 million
payment on bonds that mature in 2024, starting a 30-day grace
period to cover the amount, according to the company's public
filings.
"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 Covid-19 pandemic," said Robert Eifler,
Noble's chief executive.
The company, which has a fleet of 24 offshore drilling rigs,
will continue operating during the chapter 11 case.
The coronavirus pandemic has hurt the global economy, oil demand
has fallen and there is a supply glut. Those factors have combined
to drive down crude-oil prices, making customers think twice about
drilling for more oil.
Although oil prices have rebounded some, there remains
significant uncertainty about whether the trend will be
sustained.
Other major offshore-drilling companies have filed for
bankruptcy or are working on restructuring their debts.
London-based Valaris PLC, with some $7 billion in debt, recently
warned a bankruptcy filing could be imminent. Diamond Offshore
Drilling Inc. filed for bankruptcy in April.
In May, Noble warned it might not be able to continue as a going
concern because the pandemic was likely to cause it to burn through
cash faster than projected.
The company said major bondholders will pump $200 million of new
capital -- in the form of second-lien notes -- into the reorganized
business. A lending syndicate, led by JPMorgan Chase & Co, is
expected to lend $675 million to the new Noble. The company listed
assets of $7.3 billion against debts of $4.7 billion in court
filings.
An army of lawyers and bankers are advising Noble and its
creditors. Among Noble's bankruptcy advisers are Skadden, Arps,
Slate, Meagher & Flom LLP; Evercore Inc. and AlixPartners
LLP.
Kramer Levin Naftalis & Frankel LLP, Akin Gump Strauss Hauer
& Feld LLP and Ducera Partners LLC are advising an ad hoc group
of Noble's s priority guaranteed noteholders. Milbank LLP and
Houlihan Lokey Capital Inc. are advising senior noteholders. And
Simpson Thacher & Bartlett LLP and PJT Partners Inc. are
advising JPMorgan.
Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com
(END) Dow Jones Newswires
July 31, 2020 13:49 ET (17:49 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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